Friedrichshafen, Germany: ZF Friedrichshafen AG reported improved financial performance for the first half of 2026, posting higher profitability and stronger cash flow despite continued market challenges. The company increased its adjusted EBIT margin to 5.0 per cent, up from 4.3 per cent in the corresponding period last year, reflecting the impact of its ongoing performance improvement and cost optimisation initiatives.
ZF recorded sales of €19.3 billion during the first six months of 2026, compared with €19.7 billion in H1 2025. While nominal sales declined by 2.0 per cent, the company achieved organic sales growth of 0.5 per cent, adjusted for currency fluctuations and mergers and acquisitions, demonstrating resilience amid a challenging automotive market.
Adjusted EBIT rose to €964 million, compared with €853 million in the first half of 2025. The company also significantly strengthened its cash position, with adjusted free cash flow increasing to €989 million, an improvement of €524 million over the previous year’s €465 million.
“Cost discipline and a stronger focus on operational performance and value-creating products are beginning to deliver results,” said Mathias Miedreich. “The environment remains challenging, but we are making steady progress. Each step improves our performance and strengthens our financial flexibility.”
According to Michael Frick, improved profitability and disciplined investment management were the primary drivers behind the company’s stronger cash generation. He noted that cash flow was temporarily impacted by restructuring-related payments tied to provisions established in previous years, which remain part of ZF’s long-term transformation strategy.
As part of its continued portfolio optimisation, ZF reduced research and development (R&D) spending by around 7 per cent to €1.6 billion, representing 8.2 per cent of sales. Capital expenditure on property, plant and equipment also declined by approximately 19 per cent to €600 million, reflecting the company’s focus on disciplined capital allocation.
The company’s balance sheet also showed improvement. Net debt stood at approximately €9.8 billion as of June 30, 2026, while leverage improved to 2.75x, down from 2.98x at the end of 2025. ZF maintained strong liquidity of more than €7 billion, including an undrawn €3.5 billion revolving credit facility available until 2029.
ZF’s global workforce totalled 149,675 employees at the end of June 2026, down just over 2 per cent from 153,153 at the close of 2025. In Germany, headcount declined by more than 4 per cent, reflecting ongoing structural adjustments.
Looking ahead, ZF reaffirmed its full-year 2026 outlook, expecting sales of more than €38 billion, an adjusted EBIT margin within the guided range of 4.0 to 5.0 per cent, and adjusted free cash flow exceeding €1 billion.
Frick stated that the company’s mid-year profitability, already at the upper end of its guidance range, demonstrates that ZF’s performance improvement programme is gaining momentum. However, he cautioned that geopolitical uncertainties and continued weakness in European automotive markets remain key risks, requiring sustained focus on operational efficiency and competitiveness.
Source: ZF
