ZF shifts strategy as hybrid demand eases debt pressure

ZF Friedrichshafen is seeing stronger orders for hybrid and combustion-engine components arsenic the gait of electrical vehicles (EV) adoption moderates.

Michael Frick, CFO of ZF, told Bloomberg the institution is shifting from an EV-first attack to supplying components crossed electric, hybrid and interior combustion motor platforms.

The German automotive supplier’s determination is intended to bolster the equilibrium expanse and amended refinancing prospects.

ZF faces refinancing needs exceeding €13bn ($15.31bn) by the extremity of the decade, amid higher involvement rates and weaker operating margins.

The institution has begun plans to destruct astir 14,000 roles, including wrong its EV division, arsenic portion of efforts to stabilise finances.

Frick said slower uptake of battery-EVs is sustaining request for hybrid systems, adding that European plug-in hybrid request accrued by astir one-third past year, supporting ZF’s powertrain business.

The strategy displacement forms portion of broader efforts to chopped indebtedness aft ZF’s recognition ratings fell beneath concern grade.

The downgrade followed 2 acquisitions totalling astir $20bn aimed astatine expanding electrical and software-defined conveyance capabilities.

ZF acquired TRW Automotive and WABCO successful 2015 and 2020, respectively.

Frick said borrowings fell by a debased triple-digit million-euro magnitude implicit the past twelvemonth and that the institution is moving towards regaining investment-grade status.

According to the report, ZF plans to usage portion of its €6bn liquidity to bargain backmost a important stock of bonds owed successful 2027.

Remaining maturities are expected to beryllium met done operating currency travel and proceeds from ongoing transactions.

In December, ZF sold its driver-assistance concern to Samsung Electronics-owned Harman International for €1.5bn.

The institution is besides reviewing options for different units, including a imaginable merchantability of its Lifetec division, partnerships crossed parts of its powertrain operations and equity realisation from its upwind business.

The institution is besides seeking to turn successful defence, aiming to treble vulnerability from a debased base, with defence expected to correspond astir 1% of gross by 2028, the study added.

"ZF shifts strategy arsenic hybrid request eases indebtedness pressure" was primitively created and published by Just Auto, a GlobalData owned brand.

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