ZIM Integrated Shipping Services Ltd., a global container liner shipping company, announced today its consolidated results for the three and six months ended June 30, 2022.

Second Quarter 2022 Highlights

  • Net income for the second quarter was $1.34 billion (compared to $888 million in the second quarter of 2021), a year-over-year increase of 50%, or $11.07 per diluted share[1] (compared to $7.38 in the second quarter of 2021)
  • Adjusted EBITDA for the second quarter was $2.10 billion, a year-over-year increase of 57%
  • Operating income (EBIT) for the second quarter was $1.76 billion, a year-over-year increase of 52%
  • Revenues for the second quarter were $3.43 billion, a year-over-year increase of 44%
  • Carried volume in the second quarter was 856 thousand TEUs, a year-over-year decrease of 7%
  • Average freight rate per TEU in second quarter was $3,596, a year-over-year increase of 54%
  • Net leverage1 ratio of 0.1x at June 30, 2022, compared to 0.0x at December 31, 2021
  • Declared dividend of approximately $571 million, or $4.75 per share, representing approximately 30% of second quarter net income and a 10% onetime catch-up from the Q1 2022 net income

Eli Glickman, ZIM President & CEO, stated, “We reported today strong Q2 results, including net profit of $1.34 billion, as well as our best ever first half-year results with standout margins, among the highest of our liner peers. During this period, we maintained our strong execution, agility and commitment to profitable growth as we continue to advance ZIM’s position as an innovative digital leader of seaborne transportation. Due to our conviction in ZIM’s ability to earn sustainable long-term profits, we are increasing our quarterly dividend payout from 20% to 30% of quarterly net income, allowing shareholders to benefit from our strong results even more directly on a quarterly basis. Importantly, at the same time, we maintain our dividend policy, according to which shareholders may receive up to 50% of annual earnings.”

Glickman added, “Over the past several weeks, we have seen a gradual decline in freight rates, including in the transpacific trades, despite continued port congestion and resilient demand, driven by macroeconomic and geopolitical uncertainties. The dynamic nature of our industry illustrates the importance of staying focused on ZIM’s core strategy and key strengths. Our global niche approach is centered on successfully identifying attractive growth opportunities and adjusting our fleet size dependent on changing market conditions. A prime example of this has been the growth in our car carriage activities, growing from one vessel operated 2 years ago to 10 car carriers operated today. We believe that this approach will continue to serve us well as the market is expected to normalize from peak levels.”

Glickman concluded, “Despite the backdrop of various challenges, based on our strong performance in the year to date coupled with spot and contract rates that remain highly profitable, we are reaffirming our 2022 guidance, which would mark another year of record earnings and profitability. Moving forward, we are confident that our differentiated strategy, the proactive steps we have taken to strengthen our commercial offering and secure cost efficient newbuild capacity through multiple chartering agreements, and continued investment in digital initiatives and disruptive technologies, will position ZIM as a top performer in our industry and enable us to deliver long-term value to our shareholders.”

Summary of Key Financial and Operational Results

Q2.22

Q2.21

1H.22

1H.21

Carried volume (K-TEUs)..........................................

856

921

1,715

1,739

Average freight rate ($/TEU)....................................

3,596

2,341

3,722

2,145

Revenue ($ in millions).............................................

3,429

2,382

7,145

4,126

Operating income (EBIT) ($ in millions)...................

1,764

1,157

4,007

1,841

Profit before income tax ($ in millions)....................

1,736

1,112

3,955

1,756

Net income ($ in millions).........................................

1,336

888

3,047

1,478

Adjusted EBITDA1 ($ in millions)..............................

2,101

1,335

4,634

2,156

Adjusted EBIT1 ($ in millions)...................................

1,764

1,159

4,006

1,847

Adjusted EBITDA margin (%)...................................

61

56

65

52

Adjusted EBIT margin (%).......................................

51

49

56

45

Net cash generated from operating
activities ($ in millions).............................................

1,710

1,181

3,370

1,958

Earnings per share (diluted EPS) ($)........................

11.07

7.38

25.26

12.56

Free cash flow1 ($ in millions)..................................

1,639

851

3,122

1,495

JUN.22

DEC.21

Net debt (net cash)1 ($ in millions)..........................

630

(509)

Financial and Operating Results for the Second Quarter Ended June 30, 2022

Total revenues were $3.43 billion for the second quarter of 2022, compared to $2.38 billion for the second quarter of 2021, primarily driven by elevated freight rates, offset by slightly lower volumes.

Operating income (EBIT) for the second quarter of 2022 was $1.76 billion, compared to $1.16 billion for the second quarter of 2021, resulting from higher revenues which more than compensated for increased costs, primarily vessel chartering and bunkering costs.

Net income for the second quarter of 2022 was $1.34 billion, compared to $888 million for the second quarter of 2021. Net income for the second quarter of 2022 included a tax expense of $401 million, compared to $224 million for the second quarter of 2021.

Adjusted EBITDA was $2.10 billion for the second quarter of 2022, compared to $1.34 billion for the second quarter of 2021. Adjusted EBIT was $1.76 billion for the second quarter of 2022, compared to $1.16 billion for the second quarter of 2021. Adjusted EBITDA and Adjusted EBIT margins for the second quarter of 2022 were 61% and 51%, respectively. This compares to 56% and 49% for the second quarter of 2021.

Net cash generated from operating activities was $1.71 billion for the second quarter of 2022, compared to $1.18 billion for the second quarter of 2021.

ZIM carried 856 thousand TEUs in the second quarter of 2022, compared to 921 thousand TEUs in the second quarter of 2021. The average freight rate per TEU was $3,596 for the second quarter of 2022, compared to $2,341 for the second quarter of 2021.

Financial and Operating Results for the Six Months Ended June 30, 2022

Total revenues were $7.15 billion for the first half of 2022, compared to $4.13 billion for the first half of 2021, primarily driven by elevated freight rates.

Operating income (EBIT) for the first half of 2022 was $4.01 billion, compared to $1.84 billion for the first half of 2021. Similar to the second quarter, the six-month operating income benefited from the elevated freight rates, the impact of which was partially offset by the increased vessel chartering and bunkering costs.

Net income for the first half of 2022 was $3.05 billion, compared to $1.48 billion for the first half of 2021. Net income for the first half of 2022 included a tax expense of $908 million, compared to $278 million for the first half of 2021.

Adjusted EBITDA was $4.63 billion for the first half of 2022, compared to $2.16 billion for the first half of 2021. Adjusted EBIT was $4.01 billion for the first half of 2022, compared to $1.85 billion for the first half of 2021. Adjusted EBITDA and Adjusted EBIT margins for the first half of 2022 were 65% and 56%, respectively. This compares to 52% and 45% for the first half of 2021.

Net cash generated from operating activities was $3.37 billion for the first half of 2022, compared to $1.96 billion for the first half of 2021.

ZIM carried 1,715 thousand TEUs in the first half of 2022, compared to 1,739 thousand TEUs in the first half of 2021. The average freight rate per TEU was $3,722 for the first half of 2022, compared to $2,145 for the first half of 2021.

Liquidity, Cash Flows and Capital Allocation

ZIM’s total cash position (which includes cash and cash equivalents and investments in bank deposits and other investment instruments) increased by $121 million from $3.81 billion as of December 31, 2021 to $3.93 billion at June 30, 2022. Capital expenditures totaled $82 million for the second quarter of 2022, compared with $331 million for the second quarter of 2021. Net debt was $630 million as of June 30, 2022, compared to net cash of $509 million as of December 31, 2021, a change of $1.14 billion. ZIM’s net leverage ratio as of June 30, 2022 was 0.1x, compared to 0.0x as of December 31, 2021.

Updated Dividend Policy and Q2-2022 Dividend

Commencing with the dividend for the second quarter of 2022, ZIM intends to distribute a dividend to its shareholders on a quarterly basis at a rate of approximately 30% of the net quarterly income (up from 20% of net income) of each of the first three fiscal quarters of the year. The Company further expects that the cumulative annual dividend amount to be distributed by the Company (including the interim dividends paid on account of the first three fiscal quarters of the year) will total 30-50% of its annual net income. All future dividends are subject to the Company's Board discretion and to the restrictions provided by Israeli law.

In accordance with the Company's updated dividend policy, ZIM's Board of Directors declared a cash dividend of approximately $571 million, or $4.75 per ordinary share, reflecting 30% of second quarter 2022 net income plus a one-time catch up of 10% of Q1 2022 net income. The dividend will be paid on September 8, 2022 to holders of ZIM ordinary shares as of August 29, 2022.

Reaffirmed Full-Year 2022 Guidance

The Company reaffirmed its previously provided guidance for the full-year 2022 and expects to generate Adjusted EBITDA of between $7.8 billion and $8.2 billion and Adjusted EBIT of between $6.3 billion and $6.7 billion.

Collaboration with 2M Alliance Partners

The extension and modification of the Company’s operational collaboration agreement with the 2M alliance partners became effective April 2, 2022, and ZIM and the 2M alliance partners began operating their joint services on the Asia – US East Coast (USEC) and Asia – US Gulf Coast (USGC) trades based on a full slot exchange and vessel sharing agreement. Accordingly, ZIM currently operates two out of the six joint Asia to USEC services (ZCP & ZSE) as well as three additional vessels on one of two joint Asia to USGC services (ZGX). Separately, ZIM’s slot purchase agreement with the 2M alliance partners on the Asia to Mediterranean and Pacific Northwest trades was terminated and ZIM launched independent services.

Use of Non-IFRS Measures in the Company’s 2022 Guidance

A reconciliation of the Company’s non-IFRS financial measures included in its full-year 2022 guidance to corresponding IFRS measures is not available on a forward-looking basis. In particular, the Company has not reconciled its Adjusted EBITDA and Adjusted EBIT because the various reconciling items between such non-IFRS financial measures and such corresponding IFRS measures cannot be determined without unreasonable effort due to the uncertainty regarding, and the potential variability of, the future costs and expenses for which the Company adjusts, the effect of which may be significant, and all of which are difficult to predict and are subject to frequent change.