ZIM’s loss drops as EBITDA and cash flow jump

ZIM’s year-over-year operating cash flow zoomed upward by more than 70% in the first quarter of 2020.

The Israel-based container carrier reported operating cash flow of $101.6 million in Q1, a 70.2% increase from the $59.7 million reported in 2019.

ZIM Integrated Shipping Services Ltd. said that despite the challenging and unprecedented business environment during the coronavirus pandemic, it continued to improve its commercial and financial performance and expand its global network. 

Adjusted net loss was reduced from $17.5 million in Q1 2019 to $6 million this year. Net loss was whittled from $24.3 million last year to $11.9 million in Q1 2020.

Adjusted earnings before interest, taxes depreciation and amortization (EBITDA) was $97.2 million, a 40.3% leap from the $69.3 million reported in Q1 2019. Adjusted earnings before interest and taxes (EBIT) was up 23.6%, from $22 million in the first quarter of 2019 to $27.2 million in the same period this year.

“I’m pleased to report a significant improvement in ZIM’s performance compared to the same period in 2019. Despite the unprecedented impact of the COVID-19 crisis on the global economy in general and on the shipping industry in particular, ZIM was able to mitigate the adverse impact of the crisis, and Q1 2020 results show improvements in all parameters compared to the same period in 2019, including strong cash generation and a continued deleveraging of our balance sheet,” said ZIM President and CEO Eli Glickman in this week’s earnings release.

ZIM, which describes itself as a global niche carrier that operates in select trade lanes, did not respond by press time to a request for details on how it improved its cash flow or decreased its debt by such large percentages.

Total Q1 2020 revenues were $823.2 million, a 3.4% year-over-year increase from $796.2 million in 2019.

Referring to the COVID-19 pandemic, Glickman said ZIM “took decisive steps to cope with the new reality by cutting costs, finding out-of-the-box operational solutions and switching smoothly to work-from-home mode. We took these actions in order to keep the supply chain running and provide our customers a very high level of service with minimal disruption.”

When presenting its full-year 2019 results in March, ZIM said it had benefited from its strategic relationship with the 2M Alliance of Maersk and MSC. ZIM began sharing space with Maersk and MSC on several services between Asia and the U.S. East Coast in September 2018. ZIM reported an adjusted net profit of $12 million in 2019, compared to a $44.6 million loss in 2018. 

ZIM carried 638,000 twenty-foot equivalent units (TEUs) in Q1 2020, a 4.5% decrease from the 668,000 TEUs moved in the same period last year. The average freight rate per TEU in the first quarter was $1,091, compared to $1,019 in Q1 2019, a 7.1% increase. 

“While the crisis is still ongoing, we continue to deliver the best service to our customers. I’m convinced that our clear strategy and innovative approach will continue to lead us forward and strengthen our position,” Glickman said.

ZIM will conduct a conference call on June 8 for holders of its Series 1A, 2A, 1B and 2B notes to discuss the first-quarter results.