Workforce reduction, debt reduction, divestiture of non-profitable businesses: ZF's adjusted EBIT reaches 1.7 billion euros in 2025, with China market becoming the core growth driver

Why has the Chinese market becomeZF’s first choice for technology implementation?

Reporter: Huang Xinxu Editor: Pei Jianru

On March 19, ZF announced its 2025 financial report, showing that during the reporting period, ZF’s sales were approximately €38.8 billion, a decline from €41.4 billion in 2024. Excluding impacts from acquisitions and exchange rates, organic growth was about 0.6%. The adjusted EBIT margin increased from 3.5% in 2024 to 4.5%, corresponding to an adjusted EBIT of about €1.7 billion. Adjusted free cash flow was approximately €1.4 billion, surpassing the €500 million target.

“Reducing financial debt remains our top priority. Every euro saved on interest expenses enhances the company’s resilience and broadens financial space for value-added projects,” said Matthias Miedl, CEO of ZF Group, at the annual financial report press conference. “From an operational perspective, we have exceeded our 2025 targets, and efficiency improvement plans are showing significant results. We will continue to prioritize performance and profitability, rather than simply expanding sales volume.”

Image source: ZF official WeChat

Under clear strategies of cost reduction, efficiency enhancement, and financial optimization, ZF has initiated a series of adjustments in asset structure and business layout for 2025.

Over the past year, ZF terminated some unprofitable electric drive projects. For example, the Advanced Driver Assistance Systems (ADAS) business was sold to U.S. cockpit electronics leader HARMAN at an estimated valuation of €1.5 billion. The transaction is still awaiting regulatory approval and is expected to be completed in the second half of 2026.

Additionally, in the second half of last year, ZF reached an agreement with employee representatives to restructure the electric drive transmission division, with the plan to continue the restructuring process into 2026. During this process, ZF also reached agreements with multiple customers to prematurely end some cooperation projects.

Financially, ZF reduced about €250 million in debt in 2025, bringing net debt down to €10.2 billion. Miedl stated, “Asset impairments on non-profit projects will have a one-time impact on the 2025 balance sheet but will relieve us of burdens for future development.”

Image source: ZF official WeChat

ZF’s comprehensive strategic adjustments also extend to human resources optimization. As of December 31, 2025, ZF’s global workforce was about 153,000, a 5% decrease year-over-year. ZF states that it is gradually reducing staff through natural attrition, severance packages, partial retirement plans, and reduced working hours on a voluntary basis.

“The overall market situation has not fundamentally changed, and there are no signs of a full recovery in demand. We must achieve performance breakthroughs in an environment lacking substantial market growth, which requires the group to further improve profitability,” said Michael Frick, CFO of ZF Group. “ZF will continue to pursue organic debt reduction and selectively divest assets to further optimize financial health.”

ZF expects that in 2026, the global economic environment will remain uncertain. Based on stable exchange rates, annual sales are expected to exceed €38 billion. With stable sales and procurement markets and continued strict cost control, ZF’s adjusted EBIT margin is projected to reach 4%–5%, and adjusted free cash flow (excluding M&A impacts) is expected to exceed €1 billion.

Image source: ZF official WeChat

However, unlike the cautious stance of the global market, the Chinese market has become a core source of assured growth for ZF.

According to ZF sources told the Daily Economic News, the group increasingly chooses to develop and mass-produce cutting-edge technologies first in China. For example, the steer-by-wire system was first launched in China, and the first active rear-wheel steering AKC project and IPA stabilizer link have been mass-produced in China; the fourth-generation 8-speed hybrid transmission is being localized and has secured initial orders, with mass production planned by the end of this year; the first four-in-one range extender drive system eRE Plus, specially designed for Chinese new energy vehicles, has already been launched.

Wang Runyi, Executive Vice President of ZF Group, President of China, and President of Asia-Pacific Operations, said: “In 2025, despite a complex and changing environment, the Asia-Pacific region remains an important growth pole for the group’s global development. ZF’s business in Asia-Pacific continues to grow, with new orders, improved operational efficiency, faster customer response, and core financial indicators far exceeding expectations, contributing significantly to the group.”

Daily Economic News