Annual Results 2025: ZF Improves Operating Performance and Reduces Debt

“Operationally, we surpassed our 2025 targets. The fact that our efficiency program is gaining traction encourages us to stay the course. Performance and profitability take precedence over sales and size. But we also know: continuing our upward path will require full focus and maximum effort across the Group,” said ZF CEO Mathias Miedreich at the annual results presentation in Friedrichshafen. “The numbers reflect our past, while our business momentum points to our future. We will steadily rebuild the level of profitability our owners – and we ourselves – expect.”

Miedreich outlined three priorities aimed at strengthening ZF’s long‑term competitiveness: reinforcing the company’s financial position through disciplined deleveraging and operational improvement; targeted investment in strategic core areas; and building a more agile organizational structure and culture that enables fast, market‑driven decisions. “Reducing our financial liabilities remains our top priority,” he emphasized. “Every euro saved in interest strengthens our resilience and expands the financial scope to pursue value‑accretive initiatives.”

In 2025, ZF reduced its financial liabilities by roughly €250 million, bringing net debt down to €10.2 billion despite a challenging environment. “This deleveraging is an important sign of stability and confidence – for employees, customers, and capital markets,” said CFO Michael Frick. “We will continue this path of organic debt reduction, complemented by proceeds from selective divestments.”

Strategic Realignment Progresses

ZF continued its strategic repositioning over the past year. A key step was the sale of the Advanced Driver Assistance Systems (ADAS) business to U.S.-based in-cabin electronics leader Harman Inc. at an enterprise value of €1.5 billion. The transaction – expected to close in the second half of 2026 – is subject to regulatory approvals. In addition, ZF established its wind‑power business as a standalone unit to strengthen its market agility and create strategic options.

Another significant milestone came last fall: ZF reached an agreement with employee representatives to restructure the Electrified Powertrain Technology Division (E) independently. The division will remain an integral part of ZF, with its competitiveness strengthened and its product portfolio further developed. Operating performance improved substantially year‑over‑year and is on track with the restructuring plan, which continues in 2026. Employees are contributing significantly to cost savings through reduced working hours and temporary wage concessions. “These are not easy times,” Miedreich noted. “All the more reason to thank our employees for their team spirit and strong commitment to getting ZF back on a clear path to success.”

As part of Division E restructuring, ZF agreed with several customers to terminate several projects ahead of schedule. Due to the slower‑than‑expected market ramp‑up of electric mobility, these programs would not have achieved the required profitability. The decision results in a one‑time charge of approximately €1.6 billion and is the main reason why ZF reports an accounting loss of roughly €2.1 billion for fiscal year 2025.

“The write‑downs on unprofitable projects are a one‑off effect on our 2025 balance sheet. But they remove weight from our backpack for the climb ahead,” said CEO Miedreich. Major new high‑volume awards – such as the BMW Group contract for the continued supply and further development of ZF’s proven eight‑speed automatic transmission (8HP), including electrified variants – demonstrate the strong confidence customers place in ZF technologies and their importance for future, low‑emission, technology‑open mobility. This is equally true for the Chassis Solutions business, where domestic and international customers rely heavily on ZF systems.

The company’s comprehensive realignment is also reflected in its workforce numbers. As of December 31, 2025, ZF employed 153,153 people worldwide (2024: 161,631), a 5-percent decline. In Germany, the workforce also decreased by just over 5 percent to 49,210 (2024: 52,027). ZF remains on track to meet the target announced in July 2024 to reduce its workforce in Germany by 11,000 to 14,000 positions. The company is lowering personnel capacity as planned, entirely on a voluntary basis through attrition, severance packages, partial-retirement programs and reduced working hours.

Key Figures 2025 and Financing Activities

In fiscal year 2025, ZF generated Group sales of €38.8 billion (2024: €41.4 billion), a nominal decline of about 6 percent. Excluding M&A and currency effects, sales increased by approximately 0.6 percent organically. “The overall picture hasn’t changed: We see no broad‑based recovery in demand. We must perform in an environment without meaningful market growth. That requires higher profitability. This remains our focus, along with cash‑flow generation to reduce our debt,” said CFO Frick.

Adjusted EBIT reached €1.7 billion (2024: €1.5 billion), corresponding to an adjusted EBIT margin of 4.5 percent (2024: 3.5 percent). Adjusted free cash flow, excluding M&A activities, totaled €1.4 billion (2024: €305 million). Due to the one time effects, net income amounted to minus €2.1 billion. The equity ratio stood at 13.3 percent.

Research and development (R&D) spending amounted to €3.3 billion (2024: €3.6 billion). Due to lower sales, the R&D ratio remained at 8.6 percent (unchanged from 2024), placing ZF once again among Europe’s top 20 corporate R&D investors in 2025. Capital expenditures totaled €1.8 billion (2024: €2.3 billion), corresponding to a capex ratio of 4.6 percent (2024: 5.4 percent).

A key element in strengthening ZF’s financial foundation is the company’s medium- and long‑term funding strategy. In February 2026, ZF successfully placed a €1 billion bond with a six‑year maturity and a 5.5 percent coupon. Investor demand was exceptionally strong, with the order book being six times oversubscribed. “This is a clear vote of confidence from capital markets in ZF’s strategy, credit quality, and transformation path,” CFO Frick emphasized. “The transaction marks an important milestone in our financing strategy. We secured a longer maturity at a lower interest rate. By proactively refinancing upcoming maturities, we increase financial flexibility and improve planning certainty.”

Outlook for 2026: Markets Remain Subdued

ZF expects the global economic environment in 2026 to remain marked by uncertainty and, particularly in the commercial vehicle sector, persistently weak demand. As a result, the company does not forecast a significant sales increase compared with 2025 and anticipates Group sales of more than €38 billion at stable exchange rates. Assuming stable sales and procurement markets, and with continued cost discipline, ZF considers an adjusted EBIT margin of 4.0 to 5.0 percent achievable. Adjusted free cash flow (excluding M&A effects) is expected to exceed €1 billion.

During the results presentation, CEO Mathias Miedreich also addressed political and regulatory headwinds: “Location factors continue to weigh on us. We expect Berlin to present a new reform agenda. And we expect Brussels to be honest about fleet‑wide CO₂ legislation. The European Commission has hinted at more flexibility but continues an industrial‑policy collision course. We urgently need adjustments, especially regarding plug‑in hybrids, which are a key transition technology. They ease range anxiety, support the ramp‑up of electric mobility, and help safeguard jobs.”