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(Reuters) – German auto supplier ZF Friedrichshafen is focused on an urgent need to cut its debt because of high interest rates, the German newspaper Handelsblatt reported on Sunday.
“We had to spend a low three-digit million amount more on interest in 2023 than in the previous year,” CEO Holger Klein told the newspaper.
“We are in a phase of high interest rates, which makes it urgent to reduce debt,” he said further.
Last year, the group achieved the targeted free cash flow of between 1 billion and 1.5 billion euros ($1.09-billion-$1.63 billion) and an EBIT margin of 4.7% to 5.2%, Klein said.
Asked whether the company will have to pay more than half a billion euros in interest in the current financial year, he said: “By and large, yes.”
Klein confirmed 12,000 jobs could be cut at the group, but said it would be in a socially responsible manner, adding that even if more jobs than that had to be cut by 2030, compulsory redundancies could be avoided.
He said, however, swift action was essential to address loss-making locations.
As the German auto sector grapples with the high upfront cost of shifting to electric vehicles and slower demand linked to economic weakness, ZF Friedrichshafen is exploring options for its airbag division, including a sale and a complete or partial IPO.
Klein said he would press ahead with separating the airbag division from the rest of the company, but that a sale was not essential.
“The division earns good money for ZF and our cash flow is sufficient even without a sale,” he said.
($1 = 0.9215 euros)
