Lower freight rates hurt ZIM earnings, revenue

   ZIM, the Israel-based container carrier, said it had a net loss in 2013 of $530 million compared with $428 million last year.
   Excluding extraordinary expenses, the annual loss amounted to $369 million.
   Revenues in 2013 amounted to $3.7 billion, compared with $4 billion in 2012, a decrease of 7 percent, resulting mostly from the decline in freight rates. The average freight rate in 2013 decreased by about 9 percent, from $1,342 per container in 2012 to $1,227 in 2013.
   The company noted that the Shanghai Containerized Freight Index in the Asia–North Europe trade was about 21 percent lower in 2013 than in 2012, and that in the Asia-Mediterranean trade, it was down about 15 percent in 2013 compared to 2012.
   In 2013, ZIM carried 2.5 million TEUs, compared with 2.4 million TEUs in the previous year, a 5 percent increase.
   ZIM recorded earnings before interest, tax, depreciation and amortization (EBITDA) of $48 million in 2013 and a positive operating cash flow of $13 million, “in spite of the difficult conditions in the global shipping market and the sharp decrease in freight rates for five consecutive quarters.”
   The company said it had a net loss in the fourth quarter of 2013 of $282 million compared with a loss of $238 million in the fourth quarter of 2012. Excluding extraordinary expenses, the loss amounted to $113 million.
   Revenue in the fourth quarter 2013 amounted to $888 million compared with $981 million in the fourth quarter of 2012. The company carried 646,000 TEUs in the fourth quarter, 5 percent more than the 617,000 TEUs carried in the fourth quarter of 2012.
   ZIM, which is in the midst of a financial restructuring process since early 2013, said it “succeeded in maintaining results which are at par with the industry average, and at the same time to avoid negative impact on service to customers and customers’ trust in the company.”
   It also said that when the restructuring arrangements are complete, its financial state will dramatically improve.
   The company said that in January, it signed a term sheet with a majority of its debtors, and that it “continues to make progress towards the completion of the financial arrangement, reflecting the long-term trust and support of the debtors in the company. The new financial arrangement will significantly reduce the company’s debt to a level of $1-1.5 billion and improve its expenses’ structure (mainly through reduced interest payments and vessel leasing costs). It will enable the company to face the many challenges of the shipping market in the best possible way.”
   ZIM reported earnings before interest and taxes (EBIT) in the fourth quarter of 2013 to be $132 million, compared with an operation loss of $171 million in the fourth quarter of 2012, and EBIT for the full year 2013 of $191 million, compared with $206 million in 2012.
   The improvement was largely achieved through the implementation of technological innovations which resulted in reduced fuel consumption and fuel procurement at optimal prices, steps that it said “significantly compensated for the sharp reduction in freight rates.”
   Operating cash flow in Q4 amounted to $20 million, compared with $49 million in the parallel quarter of last year.
   In 2013, the operating cash flow amounted to $13 million, compared with $94 million in 2012.
   In other news, ZIM announced Thursday that it will be represented by a fully owned agency in Rio de Janeiro as of April. The company said the agency, managed by
Silvia Kaiser, will support the company’s strategic effort to enhance service in South America. The Rio agency will be commercially responsible for Rio De Janeiro, Sepetiba and Vitoria.