Published by Global Banking & Finance Review®
Posted on January 23, 2026
2 min readLast updated: January 24, 2026
ZF Friedrichshafen's 2025 profit surpasses expectations with a strong EBIT margin and cash flow, driven by effective restructuring.
Jan 23 (Reuters) - German automotive supplier ZF Friedrichshafen reported full-year profitability above its own guidance on Friday but warned a charge of up to 1.7 billion euros to exit likely unprofitable electric-mobility projects would tip it to a reported loss.
The company said its adjusted earnings before interest and tax (EBIT) margin came in significantly above 4%, according to preliminary figures for the year, beating its 3% to 4% guidance.
However, the early termination of several electric-mobility projects would result in a one-off charge of between 1.5 billion and 1.7 billion euros ($1.76-$2.00 billion).
The projects, which the company mutually agreed with customers to discontinue, were unlikely to meet profitability targets amid slower electric vehicle adoption, it said.
Despite the charge, the exit frees the company from legacy burdens and creates room for sustainable profitability in the coming years, CFO Michael Frick said.
ZF, which is undergoing a restructuring that includes shedding thousands of jobs in response to the sluggish car industry, said its adjusted free cash flow for 2025 is expected to exceed 1 billion euros ($1.17 billion), double its 500 million euro target.
It plans to use the strong cash flow to reduce financial debt earlier than planned by the end of 2025, it said in a statement.
"The improved operating performance and faster debt reduction are encouraging," CEO Mathias Miedreich said, adding "our transformation measures are working".
($1 = 0.8523 euros)
(Reporting by Amir OrusovEditing by Linda Pasquini, Kirsten Donovan)
EBIT stands for Earnings Before Interest and Taxes. It is a measure of a firm's profitability that excludes interest and income tax expenses, providing insight into operational efficiency.
Adjusted free cash flow is the cash generated by a company after accounting for capital expenditures, adjusted for non-recurring items. It indicates the cash available for distribution to investors.
Restructuring refers to the process of reorganizing a company's structure, operations, or finances to improve efficiency and adapt to changing market conditions.
Profit margin is a financial metric that represents the percentage of revenue that exceeds the costs of goods sold. It indicates how well a company converts sales into profits.
Cash flow is the total amount of money being transferred into and out of a business. It is crucial for maintaining operations and ensuring liquidity.
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