ZIM Q2 2014 Results
ZIM concludes second quarter with about $29 million EBITDA and around $19 million operating cash flow
Net loss in the second quarter of 2014 came close to $67 million, about $30 million less than in the corresponding quarter of the previous year; 'Going concern' qualification is erased
The results constitute significant improvement, though they reflect ZIM's performance pre-restructuring
On July 16, following the end of the quarter, ZIM successfully concluded an approx. $3.4 billion debt restructuring, including a debt-equity swap with creditors of about $1.4bn , which restores the company's capital structure and financial robustness. This, together with the deletion of the 'going concern' qualification, puts the 'New ZIM' in a favorable position to ride the wave of global economic recovery
ZIM today published its results for the second quarter of 2014, on the backdrop of the successful conclusion of its debt restructuring on July 16, 2014. Under the terms of restructuring, Israel Corporation's holding in ZIM was reduced from 100% to 32%. The other shareholders are the company's creditors. At the end of July, the members of ZIM's new board of directors convened at the company's offices in Haifa, where they expressed their faith in the management, their full support in the continuing efficiency measures the company is pursuing and the company's business plan implementation.
The dramatic reduction in debt, together with liquidity infusions, which was part of the restructuring plan, position ZIM to compete successfully in the shipping industry. Finalizing the complicated restructuring paves the way for renewed momentum, the company is now prepared to ride the wave of global economic recovery. The "New ZIM" is concentrating its efforts on executing its business plan, which in substance focuses on profitable lines where the company offers added value to its customers, while improving and upgrading its points of interface with customers and continuing to improve its operating efficiency.
For the second quarter of 2014, ZIM reported a loss, before interest and tax (EBIT), of about $9 million, reflecting sharp improvement compared to the corresponding quarter of 2013, for which it reported an EBIT loss of about $29 million. Second-quarter EBITDA totaled close to $29 million, compared to approx. $12 million in the corresponding quarter of 2013. Operating cash flow totaled close to $19 million in Q2 2014, an improvement compared to about $14 million in Q2 2013. These results do not reflect the restructuring impact.
The volume of TEU containers carried in Q2 2014 of 2014 decreased by 2% compared to the second quarter of 2013, to 619,000 TEUs. Most of the decrease was due to terminating lines between Northern Europe and the United States (in mid-2013), and lines between Asia to Northern Europe (at the start of the second quarter of 2014).
Revenue in Q2 2014 amounted close to $875 million, compared to about $977 million in the corresponding quarter of 2013. The reduction in revenues was a result of: (i) closing lines (ii) not having the revenues from the container manufacturing plant in China consolidated in Q2 2013 after it was sold during the third quarter of 2013 and (iii) the sustained pressure on freight prices. Freight rates per TEU averaged $1,206, a drop of $40 per container (3%) compared with Q2 2013.
The company is continuing execution of its strategic plan in order to continue improving its results, despite the persisting decline in freight rates around the world. In spite of the uncertainty during the second quarter around the company’s ability to conclude the debt restructuring, the labor disturbances by company’s unions in Israel, shutting down of the company’s headquarters and the Sea Officers Union preventing a ship from sailing, ZIM managed to improve its results and maintain rate of profitability in the vicinity of the industry’s average.