Israeli shipping line Zim Integrated Shipping Services returned to profit in the first quarter of 2015 despite decreases in revenue and volume, attributing the positive performance to an effective business strategy it has put in place.
Net profit in non-GAAP terms for the period amounted to US$35 million compared to a $4 million loss in the previous quarter and a $53 million loss in the same quarter last year, an improvement of $39 million and $88 million, respectively. In GAAP terms the profit amounted to $12 million.
“ZIM ends Q1 of 2015 showing a return to profit and continues to record a steady and ongoing improvement of its operating results,” said a company release. “The results stem from continued improved operational efficiency, enhanced customer interface, as well as additional sailings from Asia to US East Coast, as part of the development of this trade.”
The company carried 560,000 twenty-foot equivalent units (TEUs) of containers in the first three months of the year, reflecting a 0.5% decrease compared with the previous quarter and an 8% decrease compared with the same quarter of last year. It said much of the decrease arose from terminating its service on the Asia-Northern Europe trade and withdrawing from trades that are not part of the company’s business focus.
With the reduced volume, total revenue in the first quarter of this year reached $792 million compared to $813 million in the previous quarter and $867 million in the same quarter of last year. The average freight rate per TEU amounted to $1,251, unchanged from the previous quarter and an increase of 3% compared to the same quarter of last year.
EBIT (earnings before interest and taxes) in non-GAAP terms improved to $61 million compared to $5 million in the previous quarter, and a $16 million negative EBIT in the same quarter last year, an improvement of $56 million and $77 million, respectively. In GAAP terms, the EBIT in the quarter was a $40 million profit.
EBITDA (earnings before interest, taxes, depreciation, and amortization) in non-GAAP terms amounted to a profit of $85 million compared to $30 million in the previous quarter and $22 million in the same quarter of last year, an improvement of $55 million and $63 million, respectively. In GAAP terms, EBITDA registered at $69 million.
The operating cash flow for the period amounted to $54 million compared to $43 million in the previous quarter and $23 million in the same quarter of last year.
The company recently announced the inauguration of a new line, the Zim Seven Star Express (Z7S), connecting South China, Southeast Asia, and the Indian sub-continent with the U.S. East Coast via the Suez Canal and back. The Z7S, with one of the best transit times between South China, Vietnam, Singapore and Colombo, will start on May 29 and be operated exclusively by Zim. It will deploy 10 vessels in the 5,000-6,500 TEU range.
Group president and CEO Rafi Danieli said the profit-making turn in the quarter also benefited from a sharp reduction in fuel prices. But, “at the same time we see the continued stagnation of the global economy and the volatile fuel prices, and we are taking steps to face these challenges,” he said.
Photo: kees torn
