The German automotive supplier ZF has reported a significant financial loss, with the company slipping deep into the red. A combination of high restructuring costs and rising interest payments has had a severe impact on its balance sheet, marking a turbulent period for the company.
Heavy Losses and Structural Changes
ZF, based in Friedrichshafen on the shores of Lake Constance, announced that it ended the past financial year with a net loss of over one billion euros. A key factor in this downturn was the company’s decision to set aside around 600 million euros for restructuring costs, primarily related to workforce reductions.
Adding to the strain, interest payments on ZF’s rising debt, which has now reached 10.5 billion euros, have further burdened the company’s financial position. In stark contrast, ZF had posted a profit of 126 million euros in the previous year.
Industry Under Pressure
Commenting on the challenging year, ZF CEO Holger Klein stated in a press release that 2024 had highlighted “the immense pressure on our industry and our company.” He outlined a series of strategic measures aimed at addressing these difficulties, including cost-cutting initiatives and job reductions. The company’s primary objective is to reduce its debt and transform itself into a more agile and profitable technology leader.
As one of the world’s largest automotive suppliers, ZF ranks as Germany’s second-largest in the sector, behind Bosch. The company is 93.8% owned by the Zeppelin Foundation, which is managed by the mayor of Friedrichshafen. Like many other businesses in the industry, ZF has been significantly affected by the sluggish economic climate and weak demand, particularly for electric vehicles.
Revenue Decline and Adjusted Forecasts
During the reporting period, ZF recorded total revenues of 41.4 billion euros, reflecting a decline of approximately 11%, or 5.2 billion euros, compared to the previous year. The adjusted operating profit for 2024, excluding interest and before taxes (EBIT), stood at around 1.5 billion euros—900 million euros less than in 2023.
Due to the downturn in the automotive sector, ZF had to revise its annual forecasts downward twice over the past year. However, the company ultimately met its revised targets.
Looking ahead to 2025, ZF expects to generate revenue exceeding 40 billion euros, with a profit margin of three to four percent, assuming stable exchange rates. The company anticipates that further cost savings will come into effect from 2025 as part of its ongoing restructuring efforts. Nonetheless, the outlook for the current year remains cautious.