Fiscal Year 2025

1. Strengthen our financial position: We are working to improve our operating performance and consistently reducing our debt. This allows us to retain essential cash flow within the company and regain our strategic scope for action.

2. Focus: We are aligning our strategy with the areas in which we secure or attain leadership in the future. We invest there, and only there. By sharpening our core business, we will be able to compete with confidence and return to generating healthy financial results.

3. Adapt: We are rapidly restructuring ZF’s organizational setup and processes. We operate with an agile mindset that openly embraces impulses from the markets. This increases our responsiveness and fosters a new corporate culture.

Whichever course we take in the years ahead, it will require sufficient financial freedom. That is why reducing liabilities remains our highest priority. With every euro less in interest payments, we strengthen our resilience. At the same time, the scope for pursuing initiatives that enhance our sustainable earnings is growing.

Let me provide you with some background:

Just a year ago, our net debt was €10.5 billion. At the same time, interest expenses amounted to €735 million. This was well above what our Group can sustain over the long term. We are pleased that we were able to reduce our debt by €250 million in 2025. This debt reduction, achieved despite challenging conditions, is still relatively small. However, it is a vital indicator of stability and confidence for our employees, customers and, last but not least, the financial market. The positive reactions of the capital market to this confirm that we are on the right path. Our goal is to continue reducing our debt in the current year.

A crucial step in the realignment of ZF was the agreement to sell ADAS, our passenger-car driver assistance segment, to Harman. ADAS is increasingly converging with in-car infotainment and software platforms. This is precisely where Harman ranks among the world‘s leading companies. Together with our ADAS teams, Harman will become one of the leading providers of automotive electronics for vehicle domains such as driver assistance or infotainment. ZF will remain active in the commercial-vehicle ADAS business.

The agreement with Harman is not based on technological considerations alone. The sale contributes to further reducing our debt and also makes strategic sense: It allows us to sharpen our focus on ZF‘s core strengths: chassis, driveline technology, commercial vehicles, industrial technology and aftermarket. This will enable us to direct our energy even more precisely on the areas where we create the greatest added value for our customers.

As we refine our focus, carving out or divesting selected parts of the company – including independence via an IPO – remains an option for us in other areas as well. Let me emphasize this: We are under no time pressure whatsoever. We act only when we are certain that we have the best solution. This also applies to our still highly profitable Passive Safety Technology business, which we successfully organized as an independent company in 2024 under the name ZF Lifetec. We are also setting up our wind division as an independent unit to enhance its agility and strengthen its market position, and to open up strategic options.

We see the strategic focus of our business activities as an effective response to the high level of dynamics in our markets. Even for the major players in our industry, it will ultimately become impossible to compete in every field. Development cycles are rapid, and entrepreneurial risks are high. This is another reason why we are moving forward here with new determination.

In the end, our customers remain focused on integrated, full-system solutions. To achieve this, we will strengthen our existing strategic partnerships and establish new ones. This may take the form of a joint venture, for example in the field of e-mobility. It may also involve close cooperation in fields where services are complementary. With every smart cooperation, we increase our competitiveness and open the door to new customers.

I am convinced that we will make our way back to the top not as lone fighters, but as a team. We need to collaborate with partners. And we need more intensive, faster and even more trusting cooperation within our Group. For this reason, we will further enhance cross-functional collaboration throughout ZF in the future while simultaneously strengthening divisional accountability. Instead of scheduling lengthy meetings, we now prefer to speak directly with each other. Trying out new things, making mistakes and learning quickly from them – that’s part of our new daily routine. Speed has become a critical competitive factor.

The successful agreement with the employee representatives last fall and the numerous subsequent discussions across the Group show me that we are pulling in the same direction at ZF. As part of the alliance between ZF and its employees, we have agreed to carry out the restructuring of the Electrified Powertrain Technology Division on our own. This means that the Electrified Powertrain Technology Division remains an integral part of ZF. We are strengthening its competitiveness and driving the focused development of its existing product portfolio. To this end, we are directing our efforts toward strategically relevant products such as the 8HP evo plug-in hybrid transmission or ZF’s TherMaS thermal management system. We may opt for external sourcing for certain products, including electric motors or inverters, if that offers a better economic outcome. Analyses and discussions on this are in progress.

Supported by comprehensive, company-wide measures to reduce costs, we will generate savings of more than half a billion euros in the Electrified Powertrain Technology Division by 2027. An essential contribution comes from our employees, through reduced working hours and collectively agreed contributions. These cost savings also help us establish the prerequisites to successfully tackle the realignment.

The fact that we can now respond quickly and collectively to challenges in the Group if we all pull in the same direction was also demonstrated during the Nexperia chip crisis: Shortly after the situation became known, we set up a task force. Where necessary, we agreed internally on short-time work and initiated comprehensive measures with customers and suppliers to keep supply chains stable and to review potential alternatives. For me, this flexibility and this form of cooperation are exemplary for our way ahead.

This is also a good way to keep an eye on our climate targets: Since 2025, all our locations worldwide have been fully supplied with electricity from renewable energy sources – five years earlier than planned. Together with the systematic increase in our energy efficiency, we managed to cut greenhouse gas emissions from our own operations by over 80% compared to 2019. This, along with the significantly reduced accident rate, shows the great dedication of our employees to ESG issues. I would like to thank you sincerely for this remarkable achievement.

Our industry is reshaping itself in response to a new reality. The following applies to all stakeholders: Only those who remain focused, adapt quickly and build on a stable foundation will play an active role in shaping the future of our industry. ZF is accepting this challenge – knowing that the climb is motivating, but also the most strenuous part of the journey.

In 2025, we did our homework to prepare for this. We advanced our business with focus across all divisions, broadened our customer relationships and further unlocked market potential. We introduced new processes and brought excellent products to the market: the rollout of the passenger car performance program, the integration of the new Manufacturing Platform, the entry of the AxTrax 2 electric axle into the Indian city bus market, the Chinese launch of the SAE Level 3 driver assistance system together with Horizon Robotics – the list of progress made last year could easily be continued.

We will build on this in 2026. We were able to announce a major milestone on our path back to success at the beginning of February. Together with BMW, we agreed on a long-term supply contract in the field of passenger car drives. Central to the agreement is the supply and further development of the 8HP 8-speed automatic transmission. The contract is worth several billion euros and will run until the late 2030s. This order gives us planning reliability and creates a solid foundation for both companies to advance technology-neutral and low-emission mobility of the future.

In the coming years, we aim to become even more international. We see significant potential in North America and Asia. China in particular is a market where we can play to our strengths in chassis technology. At the same time, we see potential for an upswing in the commercial vehicle business in Europe.

Germany remains a key location for us. The current measures do not change this. If we become more competitive as a Group, this will also strengthen production in Germany. We are pursuing intelligent improvements in our value chains. The number of employees in Germany will decline – but not necessarily the local added value, provided we consistently continue to strengthen the competitiveness of our locations. Here as well, together with employees and the teams on site, we have achieved initial progress which encourages us to continue along this path.

Together with my Board of Management team, I would like to thank all our employees. Day after day, your remarkable dedication ensures that we deliver on our quality promise and confirm the excellent reputation of our products. With your wealth of ideas, you are paving the way for innovations that will shape our value creation tomorrow. I am counting on you to ensure that we do not rest on our recent successes but instead use them as motivation to continue our path with determination and speed.

I thank our stakeholders for their trust and constructive support during this period of change – the owners, the partners in the market and in research, the politicians and especially also the employee representatives. We are aware of our great responsibility. In everything we do, we will be as clear and transparent as possible. I am looking forward to the constructive dialogue with you!