ZF Friedrichshafen Reports Strong EBIT Growth Amid Sales Decline

On July 31, German automotive parts supplier ZF Friedrichshafen reported that its adjusted EBIT for the first half of this year rose to €874 million, up from €780 million in the same period last year. The adjusted EBIT margin significantly increased to 4.4%, compared to 3.5% a year earlier. However, sales fell to €19.7 billion, a 10.3% decrease from €22 billion a year ago. Excluding the effects of exchange rates and mergers, organic sales declined by 1.7%. The adjusted free cash flow was €465 million, a substantial improvement from a negative €494 million a year earlier. CFO Michael Frick stated, "Thanks to performance optimization and a focused investment strategy, our free cash flow has significantly improved by approximately €1 billion compared to last year, providing additional flexibility for the company." Additionally, ZF successfully issued €1.25 billion in bonds with a five-year term during the first half of the year. Frick noted that the bond issuance received strong demand in the market, indicating continued investor confidence in ZF. The new bonds provide certainty for planning in the coming years and give the company more time for its strategic restructuring. In response to the increasingly challenging automotive market, ZF is accelerating its restructuring plan and adjusting production capacity according to market demand. The preliminary results of this performance enhancement plan have begun to show. Dr. Holger Klein, CEO of ZF, mentioned during the announcement of the first-half financial results, "ZF is implementing its most comprehensive restructuring plan in history. We prioritize profitability and competitiveness while preparing for future challenges. The measures taken to improve performance and restructuring are beginning to show results; although revenue has declined, we have still achieved higher profits. The stagnation in global vehicle production, weak promotion of electric vehicles, and uncertainties caused by U.S. tariff policies have all led to declining sales and rising costs. We are addressing these issues and accelerating our restructuring plan." It is noteworthy that Dr. Klein also mentioned ZF's participation in the IAA Mobility exhibition in Munich from September 9 to 12, where ZF will showcase its cutting-edge technologies at booth D30 in Hall A1. In July of last year, facing anticipated further weakening in market demand, ZF announced plans to restructure its plant network in Germany and adjust its workforce. As of June 30, 2025, ZF had 157,845 employees worldwide, a decrease of over 2% from the end of last year (161,631). During the same period, the number of employees in Germany nominally decreased by 2.6% to 50,683 (down from 52,027 at the end of 2024). Since the beginning of 2024, ZF has cut 11,200 full-time equivalent positions globally, including 5,700 in Germany. Additionally, 4,700 employees have signed partial retirement agreements or are approaching normal retirement. ZF ranked fourth in the Automotive News' 2025 Global Automotive Parts Suppliers Top 100 list, with sales to global automakers amounting to $37.3 billion in the previous fiscal year.