Israeli shipping line Zim Integrated Shipping Services’ net loss in the first quarter of 2014 contracted by 45 percent to US$62 million compared with the same quarter last year as the carrier utilized efficiency improvements to counter persistently weak freight rates.
The box carrier showed overall improvement in the first quarter, including an EBITDA (earnings before interest, taxes, depreciation, and amortization) of $29 million against a $6 million loss in the same quarter of last year. Earnings before interest and taxes (EBIT) in Q1 was an $8 million loss, a sharp improvement from the same quarter in 2013 that saw an operating loss of $47 million.
Containers carried increased in volume by 2 percent to 617,000 TEUs, or 20-foot-equivalent units, compared with the same quarter of last year. Revenues declined to $867 million in the first three months of the year from $918 million a year ago.
The decrease in revenue reflects continued downward pressure on freight rates, said the company. The average freight rate per TEU was $1,213, a decrease of $69 compared with Q1 of last year.
Zim announced it has finalized an over $3-billion debt restructuring plan that includes a $1.4 billion debt equity swap with creditors. The substantial debt reduction, along with the injection of new equity, will allow the carrier to compete successfully in the global shipping market, it added.
Said group CEO Rafi Danieli: “With a dramatically improved balance sheet and cost structure, the company is poised for a dramatic improvement in profitability over the coming years.”
French rival CMA CGM garnered a consolidated net profit of US$97 million in the first quarter of 2014, a 1.2 percent hike from the $96 million registered year-over-year. Like Zim, it relied on cost control to counterbalance lower freight rates.
The carrier lifted its revenue by 2.7 percent to $3.9 billion as it managed to limit the decrease in average revenue per TEU to 2.9 percent compared to the first quarter 2013. This, it added, was a smaller decrease than the industry average of 8.6 percent.
Volumes carried rose by 5.8 percent to 2.8 million TEUs, and tonnage particularly on the Asia-Europe lines, from and to the United States, as well as intra-Asia lines was sustained.
Looking ahead, the company said it expects volumes carried to continue to increase through efficiency of network and service quality, while freight rates, despite having improved, “should nevertheless remain volatile.”
Jacques R. Saadé, CMA CGM chairman and chief executive officer, also announced management movements that reaffirmed the family-run nature of the company as “a guarantee of sustainability and strength.” As he reconfirmed Farid T. Salem to his post as executive officer, he appointed his son Rodolphe Saadé as vice-chairman executive officer, “thereby making him second-in-command of the group, in line with Mr. Jacques R. Saadé’s desire for Rodolphe Saadé to succeed him when the time comes.”
The chairman’s daughter, Tanya Saadé Zeenny, was appointed executive officer of the group. She is also currently in charge of the general secretary as well as internal and external communication, and now has been given additional responsibilities to include global accounts and marketing, administration, institutional relations, the environment, and the CMA CGM Foundation.
