ZIM Reports Record Financial Results for the First Quarter of 2022
ZIM Integrated Shipping Services Ltd. reported a record net income of $1.7 billion for Q1 2022, a 190% increase from Q1 2021. Adjusted EBITDA reached $2.5 billion, up 209% year-over-year. Revenue climbed 113% to $3.7 billion, driven by a 5% increase in carried volume and a 100% rise in average freight rates per TEU. The company declared a dividend of $2.85 per share, totaling approximately $342 million, representing 20% of net income. ZIM improved its full-year guidance, expecting adjusted EBITDA between $7.8 billion and $8.2 billion.
- Record Q1 2022 net income of $1.7 billion, up 190% YoY.
- Adjusted EBITDA of $2.5 billion, a 209% increase YoY.
- Revenue of $3.7 billion, representing a 113% increase YoY.
- Declared dividend of $2.85 per share, totaling approximately $342 million.
- Increased full-year guidance for adjusted EBITDA to $7.8-$8.2 billion.
- Income tax expense increased to $508 million from $54 million YoY.
Generated Highest Ever Quarterly Net Income of
Q1 2022 Carried Volume Increased
Increased 2022 Full Year Guidance: Expect to Generate Adjusted EBITDA of
Declared Q1 2022 Dividend of
HAIFA, Israel, May 18, 2022 /PRNewswire/ -- ZIM Integrated Shipping Services Ltd. (NYSE: ZIM), a global container liner shipping company, announced today its consolidated results for the three months ended March 31, 2022.
First Quarter 2022 Highlights
- Net income for the first quarter was
$1,711 million (compared to$590 million in the first quarter of 2021), a year-over-year increase of190% , or$14.19 per diluted share2 (compared to$5.13 in the first quarter of 2021) - Adjusted EBITDA for the first quarter was
$2,533 million , a year-over-year increase of209% - Operating income (EBIT) for the first quarter was
$2,243 million , a year-over-year increase of228% - Revenues for the first quarter were
$3,716 million , a year-over-year increase of113% - Carried volume in the first quarter was 859 thousand TEUs, a year-over-year increase of
5% - Average freight rate per TEU in first quarter was
$3,848 , a year-over-year increase of100% - Net leverage1 ratio of 0.0x at March 31, 2022 (unchanged from December 31, 2021); reached positive net cash1 position of
$779 million - Declared dividend of approximately
$342 million , or$2.85 per share, representing approximately20% of first quarter net income - Entered into multiple charter agreements for 17 newbuilds, of which 3 are LNG dual-fuel container vessels
Eli Glickman, ZIM President & CEO, stated, "Building on an extraordinary 2021 for ZIM, we maintained our strong trajectory in the first quarter of 2022, delivering on our commitment to outstanding execution and profitable growth. Driven by the proactive strategies we have implemented to capitalize on both the highly attractive market and ZIM's differentiated strategy, we once again generated our highest-ever quarterly revenues, net income and adjusted EBITDA, while achieving industry-leading margins. Consistent with our focus on identifying new profitable market opportunities, we have launched 10 new lines since the beginning of 2022, and we increased our carried volume quarter-over-quarter during a time when overall industry volume decreased. Our balance sheet remains very strong, with a positive net cash position combined with shareholder equity of approximately
Mr. Glickman added, "We continue to position ZIM for long-term success, as we strengthened our future commercial prospects and improved our cost structure. Since the beginning of 2022, we have announced attractive chartering transactions for 17 newbuild vessels, securing modern and efficient tonnage particularly well-suited to serve on our expanded network of expedited services. Importantly, we will maintain flexibility to adjust our fleet size based on market conditions and be positioned at the forefront of carbon intensity reduction among global liners. The vast majority of the new capacity ZIM will add to its fleet is LNG-powered, which ensures that we will be more carbon and cost efficient and allows us to offer customers a shipping solution aligned with their own carbon reduction targets. We also continuously improve and upgrade the digital tools, platforms and solutions offered to our customers, aiming to enhance our commercial offering and provide superb customer experience."
Mr. Glickman concluded, "Our strong results to date, combined with the 2022 long-term contracts secured at rates significantly higher than those in 2021, have boosted our confidence in our 2022 results and our ability to achieve superior profitability. Based on these, we are increasing our full year 2022 guidance, and now expect to generate Adjusted EBITDA between
Summary of Key Financial and Operational Results | ||
Q1.22 | Q1.21 | |
Carried volume (K-TEUs) | 859 | 818 |
Average freight rate ($/TEU) | 3,848 | 1,925 |
Revenue ($ in millions) | 3,716 | 1,744 |
Operating income (EBIT) ($ in millions) | 2,243 | 683 |
Profit before income tax ($ in millions) | 2,219 | 644 |
Net income ($ in millions) | 1,711 | 590 |
Adjusted EBITDA1 ($ in millions) | 2,533 | 821 |
Adjusted EBIT1 ($ in millions) | 2,243 | 688 |
Adjusted EBITDA margin (%) | 68 | 47 |
Adjusted EBIT margin (%) | 60 | 39 |
Net cash generated from operating | 1,660 | 777 |
Earnings per share (fully diluted) ($) | 14.19 | 5.13 |
Free cash flow1 ($ in millions) | 1,483 | 645 |
Mar 31, 22 | Dec 31, 21 | |
Net cash1 ($ in millions) | 779 | 509 |
Financial and Operating Results for the First Quarter Ended March 31, 2022
Total revenues were
Operating income (EBIT) for the first quarter of 2022 was
Net income for the first quarter of 2022 was
Adjusted EBITDA was
Net cash generated from operating activities was
ZIM carried 859 thousand TEUs in the first quarter of 2022, compared to 818 thousand TEUs in the first quarter of 2021. The average freight rate per TEU was
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
Q1-2022 Dividend
In accordance with the Company's dividend policy, ZIM's Board of Directors declared a cash dividend of approximately
Dividend policy: the Company intends to distribute a dividend to shareholders on a quarterly basis at a rate of approximately
Chartering Agreements
During the first quarter, ZIM entered into multiple charter agreements for a total of 17 newbuilds, as follows:
- 3 x 7,000 TEU LNG dual-fuel newbuild container vessels chartered from an affiliate of Kenon Holdings
- 8 x 5,300 TEU wide beam newbuild vessels chartered from Navios Maritime Partners
- 6 x 5,500 TEU wide beam newbuild vessels chartered from MPC Container Ships
These versatile vessels can be deployed across ZIM's various global trades, including the Company's expanded network of expedited services. The vessels are expected to be delivered to ZIM throughout 2023 and 2024.
Collaboration with 2M Alliance Partners
In February 2022, the Company announced the formal extension and modification of its operational collaboration agreement with the 2M alliance partners. Effective April 2, 2022, 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 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).
Updated Full-Year 2022 Guidance
The Company increased its previously provided guidance for the full-year 2022 and now expects to generate Adjusted EBITDA of between
Management Appointments
Mr. Nissim Yochai has been appointed EVP, President of ZIM USA, and is also responsible for the Latin America business unit, following a 6-year tenure as EVP Transpacific Trade. Ms. Hani Kalinski has been promoted to EVP Transpacific Trade, replacing Mr. Yochai. Ms. Kalinski has filled various management roles at ZIM, most recently as VP Medium & Small Countries.
1 See disclosure regarding "Use of Non-IFRS Financial Measures" below.
2 The number of shares used to calculate the diluted earnings per share is 120,438,898. The number of outstanding shares as of March 31, 2022, was 119,810,688.
3 Subsequent to quarter end,
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.
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 +1-855-265-6958 or +1-718-705-8796; Israel +972-3-721-9662 or UK/international +44-1-212-818-004. The call (and slide presentation) will be available via live webcast through ZIM's website, located at the following link. Following the conclusion of the call, a replay of the conference call will be available on the Company's website.
About ZIM
ZIM (NYSE: ZIM) is a global container liner shipping company with leadership positions in the markets in which it operates. Founded in Israel in 1945, ZIM is a veteran shipping liner, with decades of experience providing customers with innovative seaborne transportation and logistics services, a reputation for industry-leading transit times, schedule reliability and service excellence. Additional information about ZIM is available at 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, global and/or regional political instability, inflation rate fluctuations, capital markets fluctuations and other risks and uncertainties detailed from time to time in the Company's filings with the U.S. Securities and Exchange Commission (SEC), including under the caption "Risk Factors" in its 2021 Annual Report filed with the SEC on March 9, 2022.
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 the comparison of 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, the non-IFRS financial measures 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 impairment of assets, non-cash charter hire expenses, capital gains (losses) beyond the ordinary course of business and expenses related to legal contingencies.
Free cash flow is a non-IFRS financial measure which we define as net cash generated from operating activities minus capital expenditures, net.
Net debt is a non-IFRS financial measure which we define as face value of short- and long-term debt, minus cash and cash equivalents, bank deposits and other investment instruments. We refer to this measure as net cash when cash and cash equivalents, bank deposits and other investment instruments exceed the face value of short- and long-term debt.
Net leverage ratio is a non-IFRS financial measure which we define as net debt (see above) divided by Adjusted EBITDA for the last twelve-month period. When our net debt is less than zero, we report the net leverage ratio as zero.
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.
+972-4-865-2520
shats.avner@zim.com
CONSOLIDATED BALANCE SHEET | |||
(U.S. dollars in millions) | |||
March 31 | December 31 | ||
2022 | 2021 | 2021 | |
Assets | |||
Vessels | 4,037.5 | 1,299.7 | 2,957.8 |
Containers and handling equipment | 1,323.6 | 665.6 | 1,365.8 |
Other tangible assets | 74.6 | 64.5 | 68.9 |
Intangible assets | 77.5 | 66.8 | 73.8 |
Investments in associates | 13.6 | 13.5 | 12.2 |
Other investments | 306.2 | 3.1 | 169.2 |
Trade and other receivables | 107.9 | 5.8 | 107.2 |
Deferred tax assets | 2.3 | 1.6 | 2.1 |
Total non-current assets | 5,943.2 | 2,120.6 | 4,757.0 |
Inventories | 173.8 | 86.3 | 119.0 |
Trade and other receivables | 1,386.4 | 700.3 | 1,278.0 |
Other investments | 2,092.4 | 63.0 | 2,144.5 |
Cash and cash equivalents | 2,727.2 | 1,188.4 | 1,543.3 |
Total current assets | 6,379.8 | 2,038.0 | 5,084.8 |
Total assets | 12,323.0 | 4,158.6 | 9,841.8 |
Equity | |||
Share capital and reserves | 2,009.8 | 1,992.4 | 2,011.4 |
Retained earnings (deficit) | 2,246.1 | (936.1) | 2,580.6 |
Equity attributable to owners of the Company | 4,255.9 | 1,056.3 | 4,592.0 |
Non-controlling interests | 4.3 | 3.8 | 7.5 |
Total equity | 4,260.2 | 1,060.1 | 4,599.5 |
Liabilities | |||
Lease liabilities | 2,784.2 | 1,055.1 | 2,178.7 |
Loans and other liabilities | 171.3 | 440.2 | 120.8 |
Employee benefits | 57.1 | 63.2 | 65.6 |
Deferred tax liabilities | 122.6 | 34.2 | 120.6 |
Total non-current liabilities | 3,135.2 | 1,592.7 | 2,485.7 |
Trade and other payables | 2,946.2 | 538.7 | 1,086.3 |
Provisions | 31.6 | 25.6 | 28.3 |
Contract liabilities | 596.6 | 295.6 | 618.3 |
Lease liabilities | 1,238.4 | 508.2 | 893.0 |
Loans and other liabilities | 114.8 | 137.7 | 130.7 |
Total current liabilities | 4,927.6 | 1,505.8 | 2,756.6 |
Total liabilities | 8,062.8 | 3,098.5 | 5,242.3 |
Total equity and liabilities | 12,323.0 | 4,158.6 | 9,841.8 |
CONSOLIDATED INCOME STATEMENTS | |||
(U.S. dollars in millions, except per share data) | |||
Three months ended | Year ended | ||
2022 | 2021 | 2021 | |
Income from voyages and related services | 3,716.4 | 1,744.3 | 10,728.7 |
Cost of voyages and related services: | |||
Operating expenses and cost of services | (1,118.3) | (880.6) | (3,905.9) |
Depreciation | (284.4) | (128.1) | (756.3) |
Gross profit | 2,313.7 | 735.6 | 6,066.5 |
Other operating income | 4.6 | 2.4 | 14.5 |
Other operating expenses | (0.1) | (0.1) | (1.0) |
General and administrative expenses | (77.1) | (55.9) | (267.7) |
Share of profit of associates | 1.4 | 1.5 | 4.0 |
Results from operating activities | 2,242.5 | 683.5 | 5,816.3 |
Finance income | 21.4 | 6.8 | 18.8 |
Finance expenses | (45.3) | (46.3) | (175.6) |
Net finance expenses | (23.9) | (39.5) | (156.8) |
Profit before income taxes | 2,218.6 | 644.0 | 5,659.5 |
Income taxes | (507.6) | (54.4) | (1,010.4) |
Profit for the period | 1,711.0 | 589.6 | 4,649.1 |
Attributable to: | |||
Owners of the Company | 1,708.8 | 587.6 | 4,640.3 |
Non-controlling interests | 2.2 | 2.0 | 8.8 |
Profit for the period | 1,711.0 | 589.6 | 4,649.1 |
Earnings per share (US$) | |||
Basic earnings per 1 ordinary share | 14.25 | 5.35 | 40.31 |
Diluted earnings per 1 ordinary share | 14.19 | 5.13 | 39.02 |
Weighted average number of shares for EPS calculation | |||
Basic | 119,910,688 | 109,777,778 | 115,105,504 |
Diluted | 120,438,898 | 114,508,115 | 118,933,723 |
CONSOLIDATED STATEMENTS OF CASH FLOW | |||
(U.S. dollars in millions) | |||
Three months ended | Year ended | ||
2022 | 2021 | 2021 | |
Cash flows from operating activities | |||
Profit for the period | 1,711.0 | 589.6 | 4,649.1 |
Adjustments for: | |||
Depreciation and amortization | 290.2 | 133.6 | 779.2 |
Net finance expenses | 23.9 | 39.5 | 156.8 |
Share of profits and change in fair value of investees | (1.5) | (2.5) | (4.7) |
Capital gain | (4.0) | (0.4) | (8.7) |
Income taxes | 507.6 | 54.4 | 1,010.4 |
Other non-cash items | 2.5 | 20.8 | |
2,529.7 | 814.2 | 6,602.9 | |
Change in inventories | (54.8) | (34.1) | (66.8) |
Change in trade and other receivables | (96.3) | (174.2) | (766.5) |
Change in trade and other payables including contracts liabilities | 36.0 | 175.7 | 555.9 |
Change in provisions and employee benefits | (2.1) | (0.7) | 6.6 |
(117.2) | (33.3) | (270.8) | |
Dividends received from associates | 0.7 | 4.4 | |
Interest received | 3.2 | 0.7 | 3.5 |
Income taxes paid | (755.7) | (4.9) | (369.1) |
Net cash generated from operating activities | 1,660.0 | 777.4 | 5,970.9 |
Cash flows from investing activities | |||
Proceeds from sale of tangible assets, intangible assets, investments and affiliates | 5.3 | 0.5 | 10.9 |
Acquisition of tangible assets, intangible assets and interest in investees | (182.5) | (133.0) | (1,005.0) |
Acquisition of investment instruments, net | (182.9) | (182.5) | |
Change in other receivables | (0.3) | (101.8) | |
Change in other investments (mainly deposits), net | 99.8 | (2.1) | (2,064.7) |
Net cash used in investing activities | (260.6) | (134.6) | (3,343.1) |
Cash flows from financing activities | |||
Receipt of long-term loans and other long-term liabilities | 59.2 | 50.0 | |
Issuance of share capital, net of issuance costs | 205.4 | 205.4 | |
Repayment of borrowings and lease liabilities | (208.9) | (190.4) | (1,191.3) |
Change in short term loans | (20.0) | (1.0) | (16.0) |
Dividend paid to non-controlling interests | (4.5) | (2.8) | (4.7) |
Dividend paid to owners of the Company | (536.4) | ||
Interest and other financial expenses paid | (40.5) | (34.8) | (160.0) |
Net cash used in financing activities | (214.7) | (23.6) | (1,653.0) |
Net change in cash and cash equivalents | 1,184.7 | 619.2 | 974.8 |
Cash and cash equivalents at beginning of the period | 1,543.3 | 570.4 | 570.4 |
Effect of exchange rate fluctuation on cash held | (0.8) | (1.2) | (1.9) |
Cash and cash equivalents at the end of the period | 2,727.2 | 1,188.4 | 1,543.3 |
RECONCILIATION OF NET INCOME TO ADJUSTED EBIT | ||
(U.S. dollars in millions) | ||
Three months ended | ||
2022 | 2021 | |
Net income | 1,711 | 590 |
Financial expenses (income), net | 24 | 39 |
Income taxes | 508 | 54 |
Operating income (EBIT) | 2,243 | 683 |
Non-cash charter hire expenses | 0 | 1 |
Expenses related to legal contingencies | 0 | 4 |
Adjusted EBIT | 2,243 | 688 |
Adjusted EBIT margin | ||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||
(U.S. dollars in millions) | ||
Three months ended | ||
2022 | 2021 | |
Net income | 1,711 | 590 |
Financial expenses (income), net | 24 | 39 |
Income taxes | 508 | 54 |
Depreciation and amortization | 290 | 134 |
EBITDA | 2,533 | 817 |
Expenses related to legal contingencies | 0 | 4 |
Adjusted EBITDA | 2,533 | 821 |
Adjusted EBITDA margin | ||
RECONCILIATION OF NET CASH GENERATED FROM OPERATING ACTIVITIES | ||
TO FREE CASH FLOW | ||
(U.S. dollars in millions) | ||
Three months ended | ||
2022 | 2021 | |
Net cash generated from operating activities | 1,660 | 777 |
Capital expenditures, net | (177) | (132) |
Free cash flow | 1,483 | 645 |
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SOURCE ZIM Integrated Shipping Services Ltd.
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