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US$213 million Q2 2023 net loss leads to H1 2023 bottom line of $271 million in red
- Net losses contrasted with $1.34 billion Q2 2022 and H1 2022 $3.05 billion net income
- ZIM says its ample liquidity and solid balance sheet keep it strong enough to generate adjusted EBITDA of $1.2-$1.6 billion and take adjusted EBIT loss of $500-$100 million
Global container liner ZIM Integrated Shipping Services Ltd posted quarterly and interim financials that are in red on rate slide and redelivery of certain vessels previously sold and leased back that gave the company a Q2 2023 net loss of US$213 million and a first-half 2023 bottom line of negative $271 million.
ZIM’s Q2 revenue plunged 62% y-o-y to $1.31 billion, reflecting sliding freight rates since January 2023 after one and a half years of climbing to historic highs before the bubble deflated amid weak demand as the global economy slowed and capacity grew as new vessels joined the world fleet.
This led to the Q2 and H1 2023 net losses that contrasted with net incomes of $1.34 billion in Q2 2022 and $3.05 billion in H1 2022, the company said, announcing its results on August 16 from its headquarters in Haifa, Israel.
ZIM president and chief executive Eli Glickman is positive that the company will be able to navigate through the challenges ahead despite the quarterly and interim setbacks.
“Although our second-quarter results reflected continued near-term challenges in the container shipping market, our total cash position of $3.2 billion at quarter’s end remains strong. We believe our ample liquidity and solid balance sheet will enable ZIM to operate from a position of strength and maintain a long-term view even during a prolonged period of market weakness,” said Glickman.
ZIM said second-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization) nosedived 87% to $275 million while it took an operating loss (EBIT) of $168 million, as against operating income of $1.76 billion in Q2 2022. Adjusted EBIT loss in Q2 was $147 million, versus adjusted EBIT of $1.76 billion in Q2 2022.
Despite the weak cargo market, ZIM carried 860,000 TEUs (twenty-foot equivalent units), up slightly year on year in Q2 2022, but the average freight rate dropped 67% y-o-y to $1,193 per TEU.
For first-half 2023, total revenue shrank to $2.68 billion from $7.15 billion in HI 2022, leaving ZIM primarily in the red on rate slide and slow demand. Revenue slipped as ZIM’s container volume fell to 1.63 million TEUs in H1 2023 from 1.72 million TEUs a year ago and the average freight rate fell to $1,286 per TEU in the first half from $3,722 in H1 2022.
The rate slide combined with the Q2 net loss to deal the company a $271 million net loss in H1 2023, versus $3.05 billion net income a year ago.
As a result, the company plunged into an operating loss (EBIT) of $182 million in H1 2023 from operating income of $4.01 billion in H1 2022. Adjusted EBITDA shrank to $648 million in H1 2023 from $4.63 billion previsouly, leading to adjusted EBIT loss of $160 million, versus $4.01 billion in H1 2022.
For full-year 2023, ZIM expects to generate adjusted EBITDA of $1.2 billion to $1.6 billion and book an adjusted EBIT loss of $500 million to $100 million, Glickman said.
Adjusted EBITDA and adjusted EBIT margins in H1 2023 were 24% and -6%, respectively. These compared with 65% and 56% for H1 2022. Net cash from operating activities was $520 million for H1 2023, versus $3.37 billion in H1 2022.
Glickman said the poor first-half performance reflects weakness in freight rates continuing into H2 2023 across all the company’s trade lanes, particularly on the Transpacific. For the full year, he expected volume growth to lag the original forecast amid continuing subdued demand.
“We continue to take proactive steps to respond to current market realities, with a focus on minimizing costs while optimizing our commercial strategy,” Glickman said.
He said ZIM had acted to rationalize its existing capacity and routinely review its services to adapt its network to customer preferences and identify new commercial opportunities that it can explore to leverage operational collaborations and improve efficiencies.
“Moving ahead, we are committed to leveraging digital initiatives, enhancing our commercial and operational resilience, and further implementing our differentiated strategy to best serve our customers and generate sustainable value for shareholders,” Glickman said.
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