ZIM Integrated Shipping Services Ltd. (ZIM) experienced a surge in its share price after reporting strong second-quarter results. The company’s revenue for the quarter climbed 48% year-over-year to $1.93 billion, surpassing the consensus estimate of $1.80 billion. ZIM’s carried volume during the quarter reached 952 thousand TEUs, a 11% year-over-year increase. The average freight rate per TEU was $1,674, a 40% jump from the previous year.
Adjusted EBITDA skyrocketed by 179% year-over-year to $766 million, with margins expanding to 40% from 21% in the prior year’s quarter. ZIM generated an EPS of $3.08, a significant improvement compared to a loss of $1.79 in the same period last year, exceeding the consensus estimate of $1.66.
While ZIM’s total cash position decreased to $2.34 billion from $2.69 billion at the end of December 2023, the company’s operating cash flow for the first six months of the year reached $1.10 billion, a substantial increase from $520 million in the previous year. ZIM’s net leverage ratio stood at 2.0x at the end of June, compared to 2.2x at the end of December 2023. Capital expenditures during the quarter were $66 million, up from $26 million a year earlier.
The company’s Board of Directors declared a cash dividend per share of $0.93, payable on September 5th to shareholders of record as of August 29th.
Eli Glickman, ZIM’s President and CEO, highlighted the company’s strategic decision to increase its spot market exposure in the Transpacific trade. This move has enabled ZIM to capitalize on the elevated rate environment, which has lasted longer than anticipated. He expects the company’s performance in the second half of 2024 to surpass the first half, driven by ongoing supply chain pressure from the Red Sea crisis and favorable demand trends.
Looking ahead, ZIM’s ongoing newbuild program will be complete by year’s end, with the delivery of the remaining eight out of 46 modern, fuel-efficient containerships, including 28 LNG-powered vessels. The company is on track to achieve its double-digit volume growth target in 2024 and is well-positioned for profitable growth in the future.
In terms of financial outlook, ZIM has raised its adjusted EBITDA forecast to $2.6 billion to $3 billion, compared to the previous range of $1.15 billion to $1.55 billion. Adjusted EBIT is now projected to be $1.45 billion to $1.85 billion, up from the previous range of zero to $400 million.
Investors seeking exposure to ZIM can consider the Vident International Equity Strategy ETF (VIDI). ZIM’s stock price jumped 17% to $22.29 in premarket trading on Monday.
