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ZIM reports improved results in 2014

After extensive debt restructuring, the Israeli ocean carrier aims to “return to profitability and growth in 2015.”

   Ocean carrier ZIM posted a net loss of $127 million in 2014, compared with a $343 million loss in 2013, according to its latest financial statements.
   The company reported its results using Non-GAAP (generally accepted accounting principles) terms in order to exclude one-time events that took place as it underwent financial restructuring in 2013-14, “so you will really be able to see the numbers that are related to the core business, and see how those improved,” said Nissim Yochai, vice president.
   Total revenues in 2014 amounted to $3.4 billion, compared with $3.7 billion in 2013.
   ZIM carried 2,360,000 TEUs in 2014, a 6 percent decrease compared with the previous year. Most of the decrease was a result of terminating service from Asia to Northern Europe as part of its business plan. In the fourth quarter, the company carried 577,000 TEUs compared with 646,000 in TEUs in the fourth quarter of 2013.
   EBIDTA (earnings before interest, depreciation, taxes and amortization) in 2014 amounted to $116 million, compared with negative $2 million EBIDTA in 2013. 2014 EBIT operating profit (in non-GAAP terms) was a $12 million loss compared to a $161 million loss the previous year.
   In the fourth quarter EBIDTA, excluding a $21 million expense due to revaluation of fuel hedging transactions, amounted to $51 million, a $10 million improvement compared to the previous quarter. Fourth quarter EBIT was $5 million.
   Rafi Danieli, president and chief executive officer, said ZIM “recorded a sharp improvement in Q4, and continues to record a steady and ongoing improvement of its operating results. Through the implementation of our business plan, enhancing efficiency and improving our service and sales, we aim to continue in order to return to profitability and growth in 2015.”
   The company said a $3.4 billion debt restructuring completed on July 16, 2014, which included a debt to equity swap of $1.4 billion, significantly improved the ZIM’s financial strength and brought the company to report positive equity.
   The carrier said it is focusing on profitable lines where it can offer added value to its customers, “while improving and upgrading its points of interface with customers and continuing to improve its operational efficiency.”
   ZIM added its “improved results derive, among other things, from organizational changes and expanding the scope of cooperation with other shipping companies which was unattainable before finalizing the restructuring. The reduction in fuel prices, which occurred towards the end of the year, also contributed to the improvement in Q4, despite these prices remaining unstable.”
   Average freight rate per TEU in 2014 was $1,243, compared with $1,219 in 2013, a 2 percent increase, according to ZIM. In Q4, the average freight rate per TEU amounted to $1,271, compared to $1,181 in the corresponding quarter in 2013, an increase of 8 percent.
   Despite the reduction in revenues, ZIM said it “managed to improve its operating profit thanks to its continued efficiency drive, improved sales and customer service, reduced fuel costs in the latter part of 2014, the termination of non-profitable lines, and freight rate increases in some other lines. The measures and initiatives that the Company promotes are reflected in a consistent improvement in its results and they put the company in a good position towards further improvement in the future.”
   Yochai noted that while the company’s operations were impacted by congestion at West Coast ports last year, ZIM also sought to identify opportunities, and sent three extra loaders from Asia to the U.S. East Coast via the Suez Canal of 8,500-10,000 TEUs.
   The additional vessels were so successful the company is evaluating whether to start up a permanent weekly string to connect South China and the Southeast Asia via the Suez. Yochai said the company would seek to finalize plans on whether to move forward in the next few weeks and have service in place for the next contract season.
   Elsewhere, he said ZIM is looking to upgrade its service the Eastern Mediterranean and Black Sea, and improve its intra-Asia network and optimize services between North America and Latin America.
   More about ZIM’s financial and operational performance in 2014 can be found in the report “ZIM remains confident amidst poor financial performance” from ocean carrier research group BlueWater Reporting.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.