ZIM Reports Financial Results for the Fourth Quarter and Full Year 2020
ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) reported strong financial results for Q4 and the full year 2020. Net income for Q4 reached $366.4 million, up from $1.2 million in Q4 2019, and total revenues increased to $1.36 billion, a 64% year-over-year growth. For the full year, net income was $524.2 million, compared to a loss of $13 million in 2019. Adjusted EBITDA for the year hit $1.04 billion, a 168% increase. ZIM's IPO raised $204 million, and it announced a long-term charter with Seaspan for LNG-fueled vessels, highlighting its commitment to sustainability.
- Net income for Q4 2020 was $366.4 million, a significant increase from $1.2 million in Q4 2019.
- Total revenues for Q4 2020 were $1.36 billion, up 64% year-over-year.
- Full-year net income reached $524.2 million, recovering from a loss of $13 million in 2019.
- Adjusted EBITDA for the full year was $1.04 billion, representing a 168% increase.
- Net leverage ratio improved to 1.2x, down from 3.6x in 2019.
- IPO raised $204 million in net proceeds, enhancing financial stability.
- Despite overall positive results, the company's high dependency on freight rate increases may pose risks in a fluctuating market.
HAIFA, Israel, March 22, 2021 /PRNewswire/ -- ZIM Integrated Shipping Services Ltd. (NYSE: ZIM), a global container liner shipping company, announced today its consolidated results for the three and twelve months ended December 31, 2020.
Fourth Quarter and Full Year 2020 Highlights
- Net income for the fourth quarter was
$366.4 million (compared to$1.2 million in the fourth quarter of 2019), or$3.65 per share1; net income for the full year was$524.2 million (compared to a loss of$13.0 million for the full year of 2019), or$5.18 per share - Adjusted EBITDA2 for the fourth quarter was
$531.3 million , a year-over-year increase of360% ; Adjusted EBITDA for the full year was$1.04 billion , a year-over-year increase of168% - Operating income (EBIT) for the fourth quarter was
$439.4 million , a year-over-year increase of883% ; operating income (EBIT) for the full year was$722 million , a year-over-year increase of372% - Adjusted EBIT for the fourth quarter was
$439.2 million , a year-over-year increase of827% ; Adjusted EBIT for the full year was$728.6 million , a year-over-year increase of389% - Revenues for the fourth quarter were
$1.36 billion , a year-over-year increase of64% ; revenues for the full year were$3.99 billion , a year-over-year increase of21% - ZIM carried 2,841 thousand TEUs in 2020, a year-over-year increase of
1% - The average freight rate per TEU in 2020 was
$1,229 , a year-over-year increase of22% - Net leverage ratio3 of 1.2x at December 31, 2020
- Subsequent to year end, completed IPO, raising
$204 million in net proceeds - Subsequent to year end, announced strategic long-term chartering agreement with Seaspan for ten "green" LNG-fueled vessels demonstrating ZIM's commitment to reducing its carbon footprint and leading environment-friendly practices in the shipping industry
Mr. Yair Seroussi, Chairman of the Board of Directors stated, "ZIM's IPO earlier this year was the culmination of many months of hard work and dedication by ZIM's management and employees in collaboration with the Board of Directors and marks the successful turnaround the Company has undergone over the past few years. We are very pleased with the financial results released today, our first as a public company, and believe that they are proof of the exceptional human capital at ZIM. Moreover, these capabilities will continue to drive ZIM's future growth and success."
Eli Glickman, ZIM President & CEO, stated, "Our all-time record results in 2020 and the significant milestones we have achieved year-to-date-2021 represent a truly momentous time for ZIM. During a global pandemic, we generated our highest net income in the company's 75-year history, underscoring the benefits of our differentiated strategy and our proactive approach to address COVID-19. We also ended the year strong, as we achieved EBIT and EBITDA at the high end of our guidance range and continued to achieve industry leading margins. We are committed to our goal of consistently performing as one of the top three carriers in terms of EBIT margin."
Mr. Glickman added, "We commenced 2021 by becoming the first global container liner to list on the NYSE, highlighting our success creating a leading asset-light shipping liner at the forefront of digitization. Following our IPO, we also announced a strategic long-term chartering agreement for ten 15,000 TEU LNG dual-fuel container vessels, positioning ZIM to meet the growing market demand on the Asia - US East Coast trade and advance our leadership in addressing environmental and sustainability issues."
Mr. Glickman concluded, "Today, ZIM is a revitalized company with new strengths, an invigorated spirit and a promising outlook for operating amid the new realities of shipping. Combined with our dedicated team of professionals and commitment to utilizing big data and technology, we remain well positioned to enhance our customer experiences, capitalize on favorable industry fundamentals, and maximize long-term profitability. In 2021, as per the guidance we provide, we expect to continue our positive trajectory, achieving significant Adjusted EBITDA and Adjusted EBIT growth and maintaining industry leading margins. We also intend to further harness our "Startup Nation" DNA based on innovation and technological collaborations to continue to develop growth engines that provide us additional revenue streams beyond our traditional shipping business."
Summary of Key Financial and Operational Results
Q4'20 | Q4'19 | 2020 | 2019 | |
Carried volume (K-TEUs)........................... | 799 | 698 | 2,841 | 2,821 |
Average freight rate ($)............................ | 1,518 | 1,017 | 1,229 | 1,009 |
Revenue ($ in millions)............................. | 1,361 | 827 | 3,992 | 3,300 |
Net income ($ in millions) ......................... | 366 | 1 | 524 | (13) |
Adjusted EBITDA ($ in millions).................. | 531 | 115 | 1,036 | 386 |
Operating income (EBIT) ($ in millions)....... | 439 | 45 | 722 | 153 |
Adjusted EBIT ($ in millions)...................... | 439 | 47 | 729 | 149 |
Adjusted EBITDA margin........................... | ||||
Adjusted EBIT margin............................... | ||||
Net cash generated from operating activities. | 414 | 89 | 881 | 371 |
Free cash flow ($ in millions)..................... | 392 | 83 | 846 | 409 |
Earnings per share ($).............................. | 3.65 | (0.00) | 5.18 | (0.18) |
Net debt ($ in millions)............................. | 1,236 | 1,372 |
Financial and Operating Results for the Fourth Quarter Ended December 31, 2020
Net income for the fourth quarter of 2020 was
ZIM carried 799 thousand TEUs in the fourth quarter of 2020, compared to 698 thousand TEUs in the fourth quarter of 2019. The average freight rate per TEU was
Operating income (EBIT) for the fourth quarter of 2020 was
Adjusted EBITDA was
Net cash generated from operating activities was
Financial and Operating Highlights for the Full Year Ended December 31, 2020
Net income for the full year of 2020 was
Operating income (EBIT) for the full year of 2020 was
ZIM carried 2,841 thousand TEUs in the full year of 2020, compared to 2,821 thousand TEUs in the full year of 2019. The average freight rate per TEU was
Adjusted EBITDA was
Net cash generated from operating activities was
Liquidity, Cash Flows and Capital Allocation
ZIM's cash and cash equivalents increased by
In February 2021, the Company completed its IPO and issued 15.0 million ordinary shares, including those issued upon the exercise of the underwriters' option, at a price to the public of
Full-Year 2021 Guidance
The Company expects to generate Adjusted EBITDA in 2021 of between
Use of Non-IFRS Measures in the Company's 2021 Guidance
A reconciliation of the Company's non-IFRS financial measures included in its full-year 2021 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.
Conference Call Details
Management will host a conference call and webcast (along with a slide presentation) to review the results and provide a corporate update today at 8:00 AM ET.
To access the live conference call by telephone, please dial the following numbers: United States 1-888-281-1167; Israel 03-918-0644; or international +44-20-3514-1906. To access the slide presentation, click here. The call will also be available via live webcast through ZIM's website, located here. Following the conclusion of the call, a replay of the conference call will be available on the Company's website.
About ZIM
ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) is a global, asset-light container liner shipping company with leadership positions in the markets where it operates. Founded in Israel in 1945, ZIM is one of the oldest shipping liners, with over 75 years of experience, providing customers with innovative seaborne transportation and logistics services with a reputation for industry leading transit times, schedule reliability and service excellence. For additional information, please visit www.zim.com.
Forward-Looking Statements
The following information contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential" or "continue," the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about the Company, may include projections of the Company's future financial results, its anticipated growth strategies and anticipated trends in its business. These statements are only predictions based on the Company's current expectations and projections about future events or results. There are important factors that could cause the Company's actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: market changes in freight, bunker, charter and other rates or prices, new legislation or regulation affecting the Company's operations, new competition and changes in the competitive environment, the outcome of legal proceedings to which the Company is a party, and other risks and uncertainties detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission, including under the caption "Risk Factors" in its 2020 Annual Report.
Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company assumes no duty to update any of these forward-looking statements after the date hereof to conform its prior statements to actual results or revised expectations, except as otherwise required by law.
The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).
Use of Non-IFRS Financial Measures
The Company presents non-IFRS measures as additional performance measures as the Company believes that it enables us to compare operating performance between periods on a consistent basis. These measures should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. Please note that Adjusted EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company's use. In addition, Non-IFRS financial measures, as those presented by the Company, may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated.
Adjusted EBITDA is a non-IFRS financial measure which we define as net income (loss) adjusted to exclude financial expenses (income), net, income taxes, depreciation and amortization in order to reach EBITDA, and further adjusted to exclude impairment of assets, non-cash charter hire expenses, capital gains (losses) beyond the ordinary course of business and expenses related to legal contingencies.
Adjusted EBIT is a non-IFRS financial measure which we define as net income (loss) adjusted to exclude financial expenses (income), net and income taxes, in order to reach our results from operating activities, or EBIT, and further adjusted to exclude non-cash charter hire expenses, impairment of assets, capital gains (losses) beyond the ordinary course of business and expenses related to legal contingencies.
Free cash flow is a non-IFRS measure which we define as net cash generated from operating activities plus the net cash generated (used) from investment activities.
See the reconciliation of net income to Adjusted EBITDA and Adjusted EBIT and net cash generated from operating activities to free cash flow under "Reconciliation of Non-IFRS Measures" below.
Investor Relations:
Elana Holzman
ZIM Integrated Shipping Services Ltd.
+972-4-865-2300
holzman.elana@zim.com
Leon Berman
The IGB Group
212-477-8438
lberman@igbir.com
Media:
Avner Shats
ZIM Integrated Shipping Services Ltd.
+972-4-8652520
shats.avner@zim.com
CONSOLIDATED BALANCE SHEET | ||
(U.S. dollars in thousands) | ||
Year ended December 31, | ||
2020 | 2019 | |
Assets | ||
Vessels | 948,004 | 717,941 |
Containers and handling equipment | 520,887 | 425,738 |
Other tangible assets | 67,133 | 69,102 |
Intangible assets | 66,465 | 64,920 |
Investments in associates | 8,441 | 8,444 |
Other investments | 4,888 | 2,766 |
Trade and other receivables | 5,293 | 5,318 |
Deferred tax assets | 1,502 | 1,048 |
Total non-current assets | 1,622,613 | 1,295,277 |
Assets classified as held for sale | 11,583 | |
Inventories | 52,237 | 60,342 |
Trade and other receivables | 520,001 | 317,059 |
Other investments | 58,976 | 59,047 |
Cash and cash equivalents | 570,414 | 182,786 |
Total current assets | 1,201,628 | 630,817 |
Total assets | 2,824,241 | 1,926,094 |
Equity | ||
Issued capital | 88 | 88 |
Capital reserves | 1,790,706 | 1,784,469 |
Accumulated deficit | (1,523,528) | (2,042,226) |
Equity attributable to owners of the Company | 267,266 | (257,669) |
Non-controlling interests | 7,189 | 5,402 |
Total equity | 274,455 | (252,267) |
Liabilities | ||
Lease liabilities | 811,840 | 641,750 |
Loans and other liabilities | 519,471 | 541,932 |
Employee benefits | 66,626 | 67,990 |
Deferred tax liabilities | 339 | 350 |
Total non-current liabilities | 1,398,276 | 1,252,022 |
Trade and other payables | 398,876 | 422,417 |
Provisions | 21,420 | 17,998 |
Contract liabilities | 230,469 | 130,281 |
Lease liabilities | 362,176 | 215,576 |
Loans and other liabilities | 138,569 | 140,067 |
Total current liabilities | 1,151,510 | 926,339 |
Total liabilities | 2,549,786 | 2,178,361 |
Total equity and liabilities | 2,824,241 | 1,926,094 |
CONSOLIDATED INCOME STATEMENTS | ||||
(U.S. dollars in thousands, except per share data) | ||||
Three months ended December 31, | Year ended December 31, | |||
2020 | 2019 | 2020 | 2019 | |
Income from voyages and related services | 1,360,846 | 827,292 | 3,991,696 | 3,299,761 |
Cost of voyages and related services | ||||
Operating expenses and cost of services | (796,142) | (685,528) | (2,835,112) | (2,810,693) |
Depreciation | (87,237) | (64,709) | (291,559) | (226,026) |
Gross profit | 477,467 | 77,055 | 865,025 | 263,042 |
Other operating income | 4,602 | 6,459 | 12,621 | 38,099 |
Other operating expenses | 4,914 | (5) | 4,272 | (1,239) |
General and administrative expenses | (48,450) | (40,088) | (163,210) | (151,605) |
Share of profits of associates | 966 | 1,172 | 3,341 | 4,725 |
Results from operating activities | 439,499 | 44,593 | 722,049 | 153,022 |
Net finance expenses | (67,706) | (41,820) | (181,260) | (154,300) |
Profit (loss) before income taxes | 371,793 | 2,773 | 540,789 | (1,278) |
Income taxes | (5,404) | (1,596) | (16,599) | (11,766) |
Profit (loss) for the year | 366,389 | 1,177 | 524,190 | (13,044) |
Attributable to: | ||||
Owners of the Company | 365,046 | (408) | 517,961 | (18,149) |
Non-controlling interests | 1,343 | 1,585 | 6,229 | 5,105 |
Profit (loss) for the year | 366,389 | 1,177 | 524,190 | (13,044) |
Earnings (Loss) per share (US$)* | ||||
Basic earnings (losses) per 1 ordinary share | 3.65 | (0.00) | 5.18 | (0.18) |
Diluted earnings (losses) per 1 ordinary share | 3.49 | (0.00) | 4.96 | (0.18) |
Weighted average number of shares for EPS calculation*: | ||||
Basic | 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 |
Diluted | 104,641,014 | 100,000,000 | 104,530,892 | 100,000,000 |
(*)Reflect a share split of 1:10 that became effective in 2021, in all presented periods. | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(U.S. dollars in thousands) | ||
Year ended December 31, | ||
2020 | 2019 | |
Cash flows from operating activities | ||
Profit (loss) for the year | 524,190 | (13,044) |
Adjustments for: | ||
Depreciation and amortization | 314,185 | 245,510 |
Impairment loss (recovery) in respect of tangible assets | (4,329) | 1,150 |
Net finance expenses | 181,260 | 154,300 |
Share of profits and change in fair value of investees | (4,143) | (4,725) |
Capital gains, net | (8,814) | (35,471) |
Income taxes | 16,599 | 11,766 |
1,018,948 | 359,486 | |
Change in inventories | 8,105 | 9,731 |
Change in trade receivables and other receivables | (204,469) | 43,422 |
Change in trade and other payables including contract liabilities | 68,670 | (28,111) |
Change in provisions and employee benefits | (2,152) | (7,690) |
(129,846) | 17,352 | |
Dividends received from associates | 4,360 | 5,453 |
Interest received | 2,317 | 1,969 |
Income taxes paid | (14,983) | (13,630) |
Net cash generated from operating activities | 880,796 | 370,630 |
Cash flows from investing activities | ||
Proceeds from sale of tangible assets, intangible assets and investments | 6,717 | 44,794 |
Acquisition of tangible assets, intangible assets and investments | (42,641) | (16,150) |
Change in other investments and other receivables | 763 | 9,382 |
Net cash generated from (used in) investing activities | (35,161) | 38,026 |
Cash flows from financing activities | ||
Receipt of long-term loans and other long-term liabilities | 678 | |
Sale and lease back transactions | 9,052 | 13,151 |
Repayment of borrowings and lease liabilities | (336,225) | (300,763) |
Change in short-term loans | 6,071 | 3,324 |
Dividend paid to non-controlling interests | (3,344) | (4,818) |
Interest paid | (133,459) | (122,972) |
Other financial expenses paid | (2,493) | |
Net cash used in financing activities | (460,398) | (411,400) |
Net change in cash and cash equivalents | 385,237 | (2,744) |
Cash and cash equivalents at beginning of the year | 182,786 | 186,291 |
Effect of exchange rate fluctuation on cash held | 2,391 | (761) |
Cash and cash equivalents at the end of the year | 570,414 | 182,786 |
RECONCILIATION OF NET INCOME TO ADJUSTED EBIT | ||||
(U.S. dollars in millions) | ||||
Three months ended December 31 | Year ended December 31 | |||
2020 | 2019 | 2020 | 2019 | |
Net income | 366.4 | 1.2 | 524.2 | (13.0) |
Financial expenses (income), net | 67.6 | 41.8 | 181.2 | 154.3 |
Income taxes | 5.4 | 1.6 | 16.6 | 11.7 |
Operating income (EBIT) | 439.4 | 44.6 | 722.0 | 153.0 |
Non-cash charter hire expenses | 1.4 | 2.4 | 7.7 | 10.5 |
Capital gain (loss), beyond the ordinary course of business | (0.1) | 0.4 | (0.1) | (14.2) |
Assets impairment loss (recovery) | (4.8) | 0.0 | (4.3) | 1.2 |
Expenses related to legal contingencies | 3.3 | 0.0 | 3.3 | (1.6) |
Adjusted EBIT | 439.2 | 47.4 | 728.6 | 148.9 |
Adjusted EBIT margin | ||||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||||
(U.S. dollars in millions) | ||||
Three months ended December 31, | Year ended December 31, | |||
2020 | 2019 | 2020 | 2019 | |
Net income | 366.4 | 1.2 | 524.2 | (13.0) |
Financial expenses (income), net | 67.6 | 41.8 | 181.2 | 154.3 |
Income taxes | 5.4 | 1.6 | 16.6 | 11.7 |
Depreciation and amortization | 93.4 | 70.1 | 314.2 | 245.5 |
EBITDA | 532.8 | 114.7 | 1,036.2 | 398.5 |
Non-cash charter hire expenses | 0.1 | 0.3 | 0.7 | 2.0 |
Capital gain (loss), beyond the ordinary course of business | (0.1) | 0.4 | (0.1) | (14.2) |
Assets impairment loss (recovery) | (4.8) | 0.0 | (4.3) | 1.2 |
Expenses related to legal contingencies | 3.3 | 0.0 | 3.3 | (1.6) |
Adjusted EBITDA | 531.3 | 115.4 | 1,035.8 | 385.9 |
Adjusted EBITDA margin | ||||
RECONCILIATION OF NET CASH GENERATED FROM OPERATING ACTIVITES TO FREE CASH FLOW | ||||
(U.S. dollars in millions) | ||||
Three months ended December 31, | Year ended December 31, | |||
2020 | 2019 | 2020 | 2019 | |
Net cash generated from operating activities | 414.4 | 89.3 | 880.8 | 370.6 |
Net cash generated from (used in) investing activities | (22.2) | (6.7) | (35.2) | 38.0 |
Free cash flow | 392.2 | 82.6 | 845.6 | 408.6 |
Footnotes:
1. Earnings per share calculation for all periods reflect a share split of 1:10 that became effective in 2021.
2. See disclosure regarding "Use of Non-IFRS Financial Measures" below.
3. Net leverage ratio is defined as face value of short- and long-term debt less cash, cash equivalents and short-term deposits divided by Adjusted EBITDA of the last twelve-month period.
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SOURCE Zim Integrated Shipping Services Ltd.
