Press Release
ZF Lifts Q1 2026 Margin as Operational Performance Strengthens
- Group posts sales of €9.4 billion in the first three months
- Adjusted EBIT margin rises to 4.7 percent, reflecting stronger operational Performance
Friedrichshafen, Germany. ZF Friedrichshafen AG made a solid start to fiscal year 2026. Sales reached €9.4 billion in the first quarter despite a persistently weak market environment. This represents organic growth of about 3 percent year over year. Operational performance continued to improve. The adjusted EBIT margin increased to 4.7 percent, up from 2.4 percent in the prior-year period. Adjusted free cash flow totaled €316 million, slightly below last year’s €356 million, mainly due to higher net working capital.
“The direction we’ve taken to improve our operating performance is the right one, and it’s essential,” said CFO Michael Frick on Wednesday in Friedrichshafen. “We are clearly making progress, but the recovery still requires time and discipline. We remain fully committed to driving performance step by step.” ZF continues to focus on efficiency, cost discipline, and financial resilience. As part of this approach, spending on research and development declined 9 percent year over year to €768 million. Capital expenditure fell 27 percent to €307 million.
Frick noted that positive organic growth was offset by currency effects and M&A-related factors. As a result, reported sales were about 2 percent below the prior‑year level of €9.6 billion. “What matters most to us is that earnings quality continues to improve,” he said. Adjusted EBIT nearly doubled year over year to €446 million from €233 million.
Adjusted free cash flow was €40 million below the prior year, largely reflecting higher net working capital. “Our strategy is unchanged,” Frick said. “We remain focused on strengthening recurring cash generation and further improving financial flexibility.”
ZF further reduced net financial liabilities. As of the end of March 2026, net debt stood at around €10.2 billion, down €32 million from year-end 2025. Leverage improved to 2.77x from 2.98x.
The conflict in the Middle East had no material impact on ZF’s financial results in the first quarter of 2026. The company continues to monitor the situation closely. Potential effects may become more visible later in the year. The overall market environment remains volatile and challenging.
