ZF Friedrichshafen AG has reported improved operating performance for fiscal year 2025, exceeding its guidance for profitability and cash flow while continuing to reduce financial liabilities. The company achieved an adjusted EBIT margin of 4.5 percent, up from 3.5 percent in 2024, with adjusted EBIT reaching €1.7 billion. Adjusted free cash flow rose significantly to €1.4 billion, surpassing expectations and marking a substantial increase from the previous year.
Group sales for the year totaled €38.8 billion, compared with €41.4 billion in 2024. Despite the decline in nominal terms, ZF recorded modest organic growth of 0.6 percent, reflecting resilience in a challenging global market environment.
The company also took decisive steps to improve long-term profitability by discontinuing several non-profitable electric mobility projects. While this resulted in a one-time charge of approximately €1.6 billion and contributed to a net loss of around €2.1 billion, the move is intended to streamline operations and strengthen future performance.
ZF outlined a strategic focus on three key priorities: improving financial stability through disciplined cost management and debt reduction, investing in core technology areas, and enhancing organisational agility to respond more effectively to market demands. As part of these efforts, the company reduced its net debt by approximately €250 million, bringing total financial liabilities to €10.2 billion.
The company continued its broader transformation strategy during the year. This included the planned sale of its Advanced Driver Assistance Systems business to Harman Inc., subject to regulatory approvals, and the establishment of its wind power activities as a standalone unit. ZF also progressed with the restructuring of its Electrified Powertrain Technology division to improve competitiveness and align with evolving market conditions.
Workforce adjustments were implemented as part of the restructuring process, with total global headcount reduced to 153,153 employees by the end of 2025. The reductions were carried out through voluntary measures, including attrition, retirement programmes, and reduced working hours.
Investment in research and development remained strong at €3.3 billion, representing 8.6 percent of sales, while capital expenditure totaled €1.8 billion. The company also strengthened its financial position through a €1 billion bond issuance in early 2026, which saw strong investor demand.
Looking ahead, ZF expects market conditions in 2026 to remain uncertain, with limited growth anticipated. The company forecasts stable sales and aims to achieve an adjusted EBIT margin of 4.0 to 5.0 percent, supported by continued cost discipline and operational focus.
