Posted on May 24, 2023
ZIM Integrated Shipping Services Ltd. (NYSE: ZIM), a global container liner shipping company, announced today its consolidated results for the three months ended March 31, 2023.
First Quarter 2023 Highlights
- Net loss for the first quarter was $58 million (compared to net income of $1,711 million in the first quarter of 2022), or a diluted loss per share of $0.50 (compared to diluted earnings per share of $14.19 in the first quarter of 2022)
- Adjusted EBITDA for the first quarter was $373 million, a year-over-year decrease of 85%
- Operating loss (EBIT) for the first quarter was $14 million, compared to operating income of $2,243 million in the first quarter of 2022. Reconciliation items between operating income and Adjusted EBIT in the first quarter were negligible.
- Revenues for the first quarter were $1,374 million, a year-over-year decrease of 63%
- Carried volume in the first quarter was 769 thousand TEUs, a year-over-year decrease of 10%
- Average freight rate per TEU in the first quarter was $1,390, a year-over-year decrease of 64%
- Net leverage ratio of 0.1x at March 31, 2023, compared to 0.0x as of December 31, 2022; net debt of $381 million, compared to net cash of $279 million as of December 31, 2022
Eli Glickman, ZIM President & CEO, stated, “Following a record year of Adjusted EBITDA and EBIT generation, ZIM’s first quarter results reflected the significant decline in freight rates and weak demand, particularly in the Transpacific trade, that began last year. While the near-term outlook for container shipping remains challenging, the proactive steps we took during the preceding highly lucrative market period better position us now to meet these challenges and we believe our differentiated strategy will ultimately deliver sustainable value for shareholders over the long term.”
Mr. Glickman added, “With a focus on enhancing our commercial and operational resilience, we adapted our vessel sourcing strategy to improve our cost structure with the addition of fuel-efficient newbuild tonnage that will overhaul our fleet profile, as well as advance our ESG goals. These include ten 15,000 TEU dual-fuel LNG vessels, which are ideally suited for our core Asia to US East Coast service, and 36 smaller, more versatile vessels, 18 of which are also dual-fuel LNG, that will enable ZIM to operate a fleet best suited for our trades and services. At the same time, our strong balance sheet and ample liquidity further make us confident that the Company will operate from a position of strength even amidst current market headwinds.”
Mr. Glickman concluded, “We continue to anticipate positive EBIT in 2023 despite macro and industry headwinds. Our expectation is for recovery in demand with inventory restocking to begin in the second half of this year, resulting in an improvement in freight rates. As such, for 2023, we have re-affirmed the guidance we shared earlier in the year of Adjusted EBITDA of between $1.8 billion and $2.2 billion and Adjusted EBIT of between $100 million and $500 million.”
Financial and Operating Results for the First Quarter Ended March 31, 2023
Total revenues were $1.37 billion for the first quarter of 2023, compared to $3.72 billion for the first quarter of 2022.
ZIM carried 769 thousand TEUs in the first quarter of 2023, compared to 859 thousand TEUs in the first quarter of 2022. The average freight rate per TEU was $1,390 for the first quarter of 2023, compared to $3,848 for the first quarter of 2022.
Operating loss (EBIT) for the first quarter of 2023 was $14 million, compared to operating income of $2,243 million for the first quarter of 2022, resulting mainly from the decrease in freight rates as well as carried volume.
Net loss for the first quarter of 2023 was $58 million, compared to net income of $1,711 million for the first quarter of 2022.
Adjusted EBITDA was $373 million for the first quarter of 2023, compared to $2,533 million for the first quarter of 2022. Adjusted EBIT loss was $14 million for the first quarter of 2023, compared to Adjusted EBIT of $2,243 million for the first quarter of 2022. Adjusted EBITDA and Adjusted EBIT margins for the first quarter of 2023 were 27% and -1%, respectively. This compares to 68% and 60% for the first quarter of 2022, respectively.
Net cash generated from operating activities was $174 million for the first quarter of 2023, compared to $1,660 million for the first quarter of 2022.
Liquidity, Cash Flows and Capital Allocation
ZIM’s total cash position (which includes cash and cash equivalents and investments in bank deposits and other investment instruments) decreased by $353 million from $4.60 billion as of December 31, 2022 to $4.25 billion as of March 31, 2023. Capital expenditures totaled $36 million for the first quarter of 2023, compared to $183 million for the first quarter of 2022. Net debt position as of March 31, 2023, was $381 million compared to net cash position of $279 million as of December 31, 2022, a decrease of $660 million. ZIM’s net leverage ratio as of March 31, 2023, was 0.1x, compared to 0.0x as of December 31, 2022.
Use of Non-IFRS Measures in the Company’s 2023 Guidance
A reconciliation of the Company’s non-IFRS financial measures included in its full-year 2023 guidance to corresponding IFRS measures is not available on a forward-looking basis. In particular, the Company has not reconciled its Adjusted EBITDA and Adjusted EBIT because the various reconciling items between such non-IFRS financial measures and the corresponding IFRS measures cannot be determined without unreasonable effort due to the uncertainty regarding, and the potential variability of, the future costs and expenses for which the Company adjusts, the effect of which may be significant, and all of which are difficult to predict and are subject to frequent change.
Full-Year 2023 Guidance
In 2023, the Company continues to expect generating Adjusted EBITDA of between $1.8 billion and $2.2 billion and Adjusted EBIT of between $100 to $500 million in light of its expectation for improvement in market conditions during the second half of 2023, despite macroeconomic and industry headwinds.
Dividend Policy and First Quarter 2023 Dividend
ZIM’s dividend policy remains unchanged, according to which the Company intends to distribute 30-50% of annual net income as a dividend to shareholders. Dividend payments will be made on a quarterly basis at a rate of approximately 30% of the net quarterly income of the first three fiscal quarters of the year (cumulatively), while the total annual dividend amount to be distributed by the Company (including any interim dividends paid during the first three fiscal quarters of the year) will total 30-50% of the annual net income. All future dividends are subject to the Company’s Board discretion and to the restrictions provided by Israeli law.
In accordance with its dividend policy and in light of the net loss recorded in the first quarter of 2023, the Company will not pay a dividend to shareholders on account of its first quarter results.
Conference Call Details
Management will host a conference call and webcast (along with a slide presentation) to review the results and provide a corporate update today at 8:00 AM ET.
To access the live conference call by telephone, please dial the following numbers: United States +1-855-243-7669 (toll free) or +1-561-771-1427; Israel +972-3-915-5970, UK/international +44-1-612-508-206. The call (and slide presentation) will be available via live webcast through ZIM’s website, located at the following link. Following the conclusion of the call, a replay of the conference call will be available on the Company’s website.
Founded in Israel in 1945, ZIM (NYSE: ZIM) is a leading global container liner shipping company with established operations in more than 90 countries serving approximately 34,000 customers in over 300 ports worldwide. ZIM leverages digital strategies and a commitment to ESG values to provide customers innovative seaborne transportation and logistics services and exceptional customer experience. ZIM’s differentiated global-niche strategy, based on agile fleet management and deployment, covers major trade routes with a focus on select markets where the company holds competitive advantages. Additional information about ZIM is available at www.ZIM.com.