CONTAINER shipping line Zim’s financial results for the second quarter of 2023 show a slight increase in volumes, but revenues and profits falling off a cliff.
The company’s net loss for the second quarter of 2023 was $US213 million, a decrease of xx% on its net income for the second quarter of 2022 of $US1.336 billion.
Zim said the expected redelivery of certain vessels it sold and leased back in 2018 negatively impacted net loss by a non-cash after tax amount of $US51 million.
Zim reported an operating EBIT loss of $US168 million, compared with an operating income of $US1.764 billion in the same period in 2022.
The company’s total revenues for the three months through 30 June were $US1.31 billion, compared with $US3.43 billion for the same period last year. This was a decrease of 62%.
While revenues fell, volumes increased. Zim carried 860,000 TEU in the second quarter of 2023 – an increase of 0.5% on the same quarter last year when it carried 856,000 TEU.
The average freight rate per TEU in the second quarter was $US1193, a year-over-year decrease of 67%.
Continued near-term challenges
Zim president and CEO Eli Glickman said the company continued to take steps to respond to “current market realities”.
“We have taken action to rationalise our existing capacity and routinely review our services to adapt our network to customer preferences and identify new commercial opportunities. We also explore opportunities to leverage operational collaborations to improve efficiencies,” he said.
“At the same time, as the year progresses, and into 2024, we expect our cost structure to improve in tandem with the delivery of our highly competitive, fuel-efficient, newbuild tonnage, including 28 LNG-powered vessels.”
Mr Glickman said the company’s second-quarter results reflected continued near-term challenges in the container shipping market.
“[However], our total cash position of $US3.2 billion at quarter’s end remains strong,” he said.
“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.”
The company’s results for the first half of 2023 echo those of the second quarter.
Compared with the first half of 2022, its total revenues fell 62% to $US2.68 billion.
Zim’s net loss for the first half was $US271 million, compared with a net income of $US3 billion in the first half of last year.
Meanwhile, Zim’s volumes decreased slightly in the first half of 2023 – down 5% on the previous year to 1.629 million TEU.
Net cash generated from operating activities was $US520 million for the first half of 2023, compared to $US3,370 million for the first half of 2022.
Clouds gather for the full year
For the full year, the company expects an adjusted EBIT loss of $US500 million to $US100 million, with an adjusted EBITDA of between $US1.2 billion and $US1.6 billion.
Zim said the guidance reflects “continued weakness in freight rates across all the company’s trades, particularly in the trans-Pacific, which the company expects to continue during the second half of 2023.
“Volume growth is also expected to be lower than originally forecasted, as demand continues to be subdued,” the company said.