Jan 23 (Reuters) - German automotive supplier ZF Friedrichshafen reported full-year profitability above own guidance on Friday, citing progress in transformation measures. The company said adjusted
ZF Friedrichshafen Surpasses Profit Margin Goals Amid E-Mobility Charge
ZF Friedrichshafen's Financial Performance
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.
Profit Margin and Earnings
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.
Impact of E-Mobility Charge
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).
Future Financial Strategy
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)
