Mar 20: ZF Friedrichshafen AG reported improved operating performance for fiscal year 2025, exceeding its guidance for profitability and cash flow despite a challenging global economic environment.
The company’s adjusted EBIT margin increased to 4.5%, up from 3.5% in 2024, while adjusted EBIT rose to €1.7 billion. Adjusted free cash flow surged significantly, reaching €1.4 billion compared to €305 million in the previous year.
Although Group sales stood at €38.8 billion, reflecting a nominal decline year-on-year, ZF achieved organic growth of 0.6%, demonstrating resilience amid subdued market demand and macroeconomic volatility.
Focus on Profitability and Efficiency
CEO Mathias Miedreich stated:
“Operationally, we surpassed our 2025 targets. Our efficiency program is gaining traction, and performance and profitability remain our top priorities. We are focused on rebuilding profitability while maintaining strong business momentum.”
The company continues to prioritize financial discipline, targeted investments, and organizational agility to strengthen long-term competitiveness. A key focus remains on reducing financial liabilities and enhancing operational efficiency.
Strengthening Financial Position
ZF reduced its net debt to €10.2 billion, reflecting ongoing deleveraging efforts. CFO Michael Frick emphasized that the company will continue pursuing organic debt reduction alongside selective divestments, reinforcing financial stability and investor confidence.
Strategic Realignment Gains Momentum
As part of its transformation strategy, ZF made significant structural changes:
-
Divestment of its Advanced Driver Assistance Systems (ADAS) business to Harman International, strengthening focus on core segments
-
Establishment of its wind power business as a standalone unit
-
Continued restructuring of the Electrified Powertrain Technology Division
Additionally, ZF discontinued several non-profitable electric mobility projects, resulting in a one-time accounting charge but enabling greater strategic flexibility moving forward.
Despite reporting a net loss due to these one-time effects, the company highlighted strong customer confidence, supported by major contracts such as continued collaboration with BMW Group for advanced transmission technologies.
Workforce and Operational Adjustments
ZF’s global workforce stood at approximately 153,000 employees at the end of 2025, reflecting a planned reduction aligned with its restructuring roadmap. The company continues to implement workforce optimization measures through voluntary programs and operational efficiencies.
Investment and Innovation
The company maintained strong focus on innovation, with research and development spending totaling €3.3 billion, positioning ZF among Europe’s leading corporate R&D investors. Capital expenditure was optimized in line with market conditions and strategic priorities.
Outlook for 2026
ZF expects continued market uncertainty in 2026, particularly in the commercial vehicle segment, with no significant increase in demand anticipated. The company forecasts stable sales levels and aims for:
-
Adjusted EBIT margin between 4.0% and 5.0%
-
Adjusted free cash flow exceeding €1 billion
CEO Mathias Miedreich also highlighted the need for regulatory flexibility in Europe, particularly around hybrid technologies, to support the transition toward sustainable mobility.
Driving Forward with Resilience
With a clear focus on profitability, disciplined financial management, and strategic realignment, ZF remains committed to navigating market challenges while positioning itself for long-term growth and innovation in the global mobility sector.
