Zim losses grow as cargo volumes drip
Israel Corp. said its Zim Integrated Shipping Services Ltd. reported a net loss of $119 million in the three months ending March 31, compared with a loss of about $29 million in the corresponding period last year.
Revenue for the quarter was $622 million compared to $1.04 billion in the same 2008 period.
Zim said it transported 410,000 TEUs during the period, about 33 percent less than the 614,000 TEUs in the same 2008 period. Average shipping price per container was about 3 percent lower than in the first quarter of 2008, it said.
“Continuation of the difficult conditions in the international shipping market is continuing to have an adverse impact on Zim and on, among other things, the results of its operations, its compliance with financial covenants and its ability to raise money, as well as on its financing conditions,” Israel Corp. said.
Israel Corp. said that as of March 31, Zim was in violation of certain financial covenants. “Zim is holding ongoing negotiations with the lending banks regarding a long-term change of the financing arrangements,' including new financial covenants, Israel Corp. said.
But it said it is committed to support Zim up to $100 million. The commitment is conditional on, among other things, all of Zim's financial creditors not taking any steps against Zim during the period of the negotiations.
Zim is negotiating with shipyards to cancel ship orders or postpone delivery and spread part of the payments for acquisition of the ships by obtaining credit.
“Consents have been obtained to postpone the delivery dates of some of the ships, for different time periods, ranging from several months up to several years, as well as in connection with provision of supplier credit with respect to a number of ships,” the company said.
“Binding agreements have not yet been signed regarding this matter.”
Other steps Zim said it is taking include:
' Return of certain leased ships, preparing for changed shipping routes including a reduced activity in certain markets.
' Idling ships, examining exiting investments auxiliary to its shipping line activities.
' Reduction of administrative expenses including dismissal of employees.