ZIM Integrated Shipping Services Ltd. (ZIM) remains optimistic on its growth prospects this year despite a weak start of 2023 as it reported its consolidated first quarter results.
The Israeli shipping line recorded a net loss of US$58 million for the first quarter of 2023, reversing a US$1.711 billion net income during the same period in 2022.
Adjusted EBITDA for the first quarter also dropped 85% to US$373 million.
For the first quarter, ZIM recorded US$1.374 billion in revenues, representing a 63% decline year-on-year as carried volume in the first quarter stood at 769,000 TEUs, declining 10% from Q1 2022.
The declines were mainly driven by the drop in the average freight rate per TEU in the first quarter, which was at US$1.390 billion — a year-over-year decrease of 64%.
Decline in Transpacific trade
"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," said
Eli Glickman, ZIM president & CEO.
"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," he added, noting that ZIM's "differentiated strategy" will ultimately deliver sustainable value for its shareholders over the long term.
Glickman noted ZIM's focus on enhancing its commercial and operational resilience — adapting its vessel sourcing strategy to improve the company's cost structure with the addition of fuel-efficient newbuild tonnage that will overhaul its fleet profile, as well as advance its ESG goals.
He said 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," the ZIM chief executive added.
Positive EBIT in 2023
Despite the recent slowdown, Glickman signalled optimism on ZIM's overall performance this year — banking on demand recovery by the second half of 2023.
"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," he said.
"As such, for 2023, we have re-affirmed the guidance we shared earlier in the year of Adjusted EBITDA of between US$1.8 billion and US$2.2 billion and Adjusted EBIT of between US$100 million and US$500 million," the ZIM chief added.