ZIM Reports Record Financial Results for the Second Quarter of 2021
ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) reported robust financial results for Q2 and H1 2021. Net income surged to $888 million, or $7.38 per diluted share, from $25 million in Q2 2020. Revenues reached $2.38 billion, marking a 200% increase year-over-year. Adjusted EBITDA grew to $1.34 billion, an 820% rise. The average freight rate per TEU climbed to $2,341, a 119% increase. ZIM announced a $238 million special cash dividend and anticipates paying a 30-50% dividend of 2021 net income in 2022.
- Net income increased to $888 million in Q2 2021, a year-over-year rise of 3,452%.
- Revenue for Q2 2021 reached $2.38 billion, a 200% increase compared to Q2 2020.
- Adjusted EBITDA rose to $1.34 billion in Q2 2021, an increase of 820%.
- Carried volume increased by 44% year-over-year, totaling 921,000 TEUs in Q2 2021.
- Declared a special cash dividend of $238 million, or $2.00 per share, to be paid on September 15, 2021.
- Reduced net leverage ratio to 0.3x from 1.2x at the end of 2020.
- Net income for Q2 reflected a tax expense of $224 million, impacting overall profitability.
- Despite strong performance, reliance on increased freight rates poses risks if market conditions change.
HAIFA, Israel, Aug. 18, 2021 /PRNewswire/ -- ZIM Integrated Shipping Services Ltd. (NYSE: ZIM), a global container liner shipping company, announced today its consolidated results for the three and six months ended June 30, 2021.
Second Quarter 2021 Highlights
- Net income for the second quarter was
$888 million (compared to$25 million in the second quarter of 2020), or$7.38 per diluted share1 - Adjusted EBITDA[2] for the second quarter was
$1.34 billion , compared to$145 million in the second quarter of 2020, a year-over-year increase of820% - Operating income (EBIT) for the second quarter was
$1.16 billion , compared to$69 million in the second quarter of 2020, a year-over-year increase of 1,581% - Adjusted EBIT for the second quarter was
$1.16 billion , compared to$73 million in the second quarter of 2020, a year-over-year increase of 1,495% - Revenues for the second quarter were
$2.38 billion , compared to$795 million in the second quarter of 2020, a year-over-year increase of200% - ZIM carried 921 thousand TEUs in the second quarter of 2021, a year-over-year increase of
44% - The average freight rate per TEU in the second quarter of 2021 was
$2,341 , a year-over-year increase of119% - Net leverage ratio3 of 0.3x at June 30, 2021, compared to 1.2x at December 31, 2020
- Completed secondary offering, which consisted of approximately 8 million shares at a price per share of
$40.00 - Redeemed in full
$349 million principal amount of Series 1 and 2 Notes due 2023 - Declared a special cash dividend of approximately
$238 million , or$2.00 per ordinary share, to be paid on September 15, 2021, to holders of the ordinary shares as of August 25, 2021; reiterated plan to distribute annual dividend of 30-50% of 2021 net income in 2022 (subject to Board approval) - Subsequent to quarter end, announced a new strategic long-term chartering agreement with Seaspan for ten 7,000 TEU "green" LNG-fueled vessels (with an option for the long-term charter of five additional such vessels), further demonstrating ZIM's commitment to reducing its carbon footprint
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.
Eli Glickman, ZIM President & CEO, stated, "I'm very proud to say that our outstanding performance and all-time record results, which have positioned us to create significant shareholder value, are a testament to the proactive strategies we have implemented to capitalize on both the highly attractive market and ZIM's differentiated approach. We continue to execute at the highest level, resulting in another record quarter, including net income, EBITDA and operating cash flow, as well as significantly improved guidance for 2021. Driving our success, we have further leveraged digitalization initiatives and have drawn on our global-niche strategy to launch new lines to address profitable, underserved routes. This was instrumental in driving our all-time high results, as ZIM's second quarter carried volume increased by
Mr. Glickman added, "Consistent with our commitment to unlock significant value, we continue to prudently allocate capital for future growth, debt repayment and return of capital to shareholders. Specifically, our investment in new containers and two strategic agreements for the long-term charter of LNG dual-fuel container vessels support our objective to provide the best and most reliable service to customers and to promote our ESG values. In addition, our strong performance and robust cash generation have allowed us to further pay down debt, resulting in a leverage ratio of 0.3x, the lowest in ZIM's history, and boost shareholders' equity to
Mr. Glickman concluded, "Looking ahead, based on our strong outlook and forward visibility, we are well positioned to return substantial capital to shareholders, with our expected 2022 dividend payout of
Summary of Key Financial and Operational Results | ||||
Q2'21 | Q2'20 | 1H'21 | 1H'20 | |
Carried volume (K-TEUs) | 921 | 641 | 1,739 | 1,280 |
Average freight rate ($/TEU) | 2,341 | 1,071 | 2,145 | 1,081 |
Revenue ($ in millions) | 2,382 | 795 | 4,126 | 1,618 |
Operating income (EBIT) ($ in millions) | 1,158 | 69 | 1,841 | 94 |
Profit before income tax ($ in millions) | 1,112 | 30 | 1,756 | 21 |
Net income ($ in millions) | 888 | 25 | 1,478 | 13 |
Adjusted EBITDA ($ in millions) | 1,335 | 145 | 2,156 | 242 |
Adjusted EBIT ($ in millions) | 1,159 | 73 | 1,847 | 100 |
Adjusted EBITDA margin (%) | 56 | 18 | 52 | 15 |
Adjusted EBIT margin (%) | 49 | 9 | 45 | 6 |
Net cash generated from operating activities ($ in millions) | 1,181 | 120 | 1,958 | 221 |
Earnings per share (fully diluted) ($) | 7.38 | 0.23 | 12.56 | 0.10 |
Free cash flow ($ in millions) | 867 | 115 | 1,510 | 214 |
Q2'21 | Q4'20 | |||
Net debt ($ in millions) | 783 | 1,236 | ||
Financial and Operating Results for the Second Quarter Ended June 30, 2021
Total revenues were
Operating income (EBIT) for the second quarter of 2021 was
Net income for the second quarter of 2021 was
Adjusted EBITDA was
Net cash generated from operating activities was
ZIM carried 921 thousand TEUs during the second quarter of 2021, compared to 641 thousand TEUs in the second quarter of 2020. The average freight rate per TEU was
Financial and Operating Results for the Six Months Ended June 30, 2021
Total revenues were
Operating income (EBIT) for the first half of 2021 was
Net income for the first half of 2021 was
Adjusted EBITDA was
Net cash generated from operating activities was
ZIM carried 1,739 thousand TEUs during the first half of 2021, compared to 1,280 thousand TEUs in the first half of 2020. The average freight rate per TEU was
Liquidity and Cash Flows
ZIM's cash and cash equivalents increased by
Early Redemption of Notes
In June 2021, the Company redeemed
Long-Term Chartering Agreement
In July 2021, the Company announced a new strategic agreement with Seaspan, for the long-term charter of ten 7,000 TEU liquefied natural gas (LNG) dual-fuel container vessels (with an option for the long-term charter of five additional such vessels), intended to be deployed across the Company's various global-niche trades.
Special Dividend
In May 2021, the Company's Board of Directors declared a special cash dividend of approximately
Updated Full-Year 2021 Guidance
The Company increased its full-year guidance and expects to generate in 2021 Adjusted EBITDA 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 +1-855-272-3518 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 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
This press release 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 that 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, 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 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 measure which we define as net cash generated from operating activities plus the net cash generated from (used in) 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.
+972-4-865-2520
shats.avner@zim.com
CONSOLIDATED BALANCE SHEET | |||
(U.S. dollars in thousands) | |||
June 30 | December 31 | ||
2021 | 2020 | 2020 | |
Assets | |||
Vessels | 1,768,298 | 714,195 | 948,004 |
Containers and handling equipment | 1,019,343 | 437,660 | 520,887 |
Other tangible assets | 66,957 | 70,494 | 67,133 |
Intangible assets | 67,374 | 64,737 | 66,465 |
Investments in associates | 12,418 | 8,436 | 8,441 |
Other investments | 5,421 | 2,810 | 4,888 |
Trade and other receivables | 6,067 | 5,736 | 5,293 |
Deferred tax assets | 1,537 | 1,153 | 1,502 |
Total non-current assets | 2,947,415 | 1,305,221 | 1,622,613 |
Assets classified as held for sale | 8,071 | ||
Inventories | 99,750 | 43,513 | 52,237 |
Trade and other receivables | 963,291 | 279,464 | 520,001 |
Other investments | 46,760 | 61,436 | 58,976 |
Cash and cash equivalents | 1,545,282 | 202,848 | 570,414 |
Total current assets | 2,655,083 | 595,332 | 1,201,628 |
Total assets | 5,602,498 | 1,900,553 | 2,824,241 |
Equity | |||
Share capital and reserves | 1,992,895 | 1,785,115 | 1,790,794 |
Accumulated deficit | (279,523) | (2,029,311) | (1,523,528) |
Equity attributable to owners of the Company | 1,713,372 | (244,196) | 267,266 |
Non-controlling interests | 5,016 | 4,156 | 7,189 |
Total equity | 1,718,388 | (240,040) | 274,455 |
Liabilities | |||
Lease liabilities | 1,427,773 | 654,061 | 811,840 |
Loans and other liabilities | 130,066 | 553,458 | 519,471 |
Employee benefits | 64,105 | 59,974 | 66,626 |
Deferred tax liabilities | 42,491 | 325 | 339 |
Total non-current liabilities | 1,664,435 | 1,267,818 | 1,398,276 |
Trade and other payables | 944,776 | 375,319 | 398,876 |
Provisions | 28,189 | 16,737 | 21,420 |
Contract liabilities | 453,045 | 120,910 | 230,469 |
Lease liabilities | 658,366 | 228,333 | 362,176 |
Loans and other liabilities | 135,299 | 131,476 | 138,569 |
Total current liabilities | 2,219,675 | 872,775 | 1,151,510 |
Total liabilities | 3,884,110 | 2,140,593 | 2,549,786 |
Total equity and liabilities | 5,602,498 | 1,900,553 | 2,824,241 |
CONSOLIDATED INCOME STATEMENTS | |||||
(U.S. dollars in thousands, except per share data) | |||||
Six months ended | Three months ended | Year ended | |||
2021 | 2020 | 2021 | 2020 | 2020 | |
Income from voyages and related services | 4,126,346 | 1,618,345 | 2,382,011 | 795,130 | 3,991,696 |
Cost of voyages and related services | |||||
Operating expenses and cost of services | (1,869,541) | (1,322,213) | (988,914) | (623,825) | (2,835,112) |
Depreciation | (298,735) | (135,811) | (170,606) | (68,748) | (291,559) |
Gross profit | 1,958,070 | 160,321 | 1,222,491 | 102,557 | 865,025 |
Other operating income | 4,165 | 5,512 | 1,852 | 3,496 | 12,621 |
Other operating expenses | (459) | (1,706) | (375) | (1,702) | 4,272 |
General and administrative expenses | (123,535) | (72,039) | (67,637) | (36,662) | (163,210) |
Share of profit of associates | 2,281 | 1,655 | 736 | 1,158 | 3,341 |
Results from operating activities | 1,840,522 | 93,743 | 1,157,067 | 68,847 | 722,049 |
Finance income | 5,699 | 1,730 | (1,116) | (2,998) | 8,103 |
Finance expenses | (90,196) | (74,577) | (43,936) | (36,122) | (189,363) |
Net finance expenses | (84,497) | (72,847) | (45,052) | (39,120) | (181,260) |
Profit before income taxes | 1,756,025 | 20,896 | 1,112,015 | 29,727 | 540,789 |
Income taxes | (278,217) | (7,499) | (223,795) | (4,413) | (16,599) |
Profit for the period | 1,477,808 | 13,397 | 888,220 | 25,314 | 524,190 |
Attributable to: | |||||
Owners of the Company | 1,474,055 | 10,491 | 886,456 | 24,040 | 517,961 |
Non-controlling interest | 3,753 | 2,906 | 1,764 | 1,274 | 6,229 |
Profit for the period | 1,477,808 | 13,397 | 888,220 | 25,314 | 524,190 |
Earnings per share (USD) | |||||
Basic earnings per 1 ordinary share | 13.11 | 0.10 (*) | 7.71 | 0.24 (*) | 5.18 |
Diluted earnings per 1 ordinary share | 12.56 | 0.10 (*) | 7.38 | 0.23 (*) | 4.96 |
(*) 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) | |||||
Six months ended | Three months ended | Year ended | |||
2021 | 2020 | 2021 | 2020 | 2020 | |
Cash flows from operating activities | |||||
Profit for the period | 1,477,808 | 13,397 | 888,220 | 25,314 | 524,190 |
Adjustments for: | |||||
Depreciation and amortization | 309,718 | 146,604 | 176,133 | 74,471 | 314,185 |
Impairment losses (recoveries) of tangible assets | 1,700 | 1,700 | (4,329) | ||
Net finance expenses | 84,497 | 72,847 | 45,052 | 39,120 | 181,260 |
Share of profits and change in fair value of investees | (3,184) | (1,655) | (752) | (1,158) | (4,143) |
Capital gain | (1,135) | (4,281) | (704) | (2,971) | (8,814) |
Income taxes | 278,217 | 7,499 | 223,795 | 4,413 | 16,599 |
2,145,921 | 236,111 | 1,331,744 | 140,889 | 1,018,948 | |
Change in inventories | (47,513) | 16,829 | (13,494) | 13,186 | 8,105 |
Change in trade and other receivables | (434,054) | 29,943 | (259,756) | 27,700 | (204,469) |
Change in trade and other payables including contract liabilities | 300,271 | (51,946) | 124,573 | (61,149) | 68,670 |
Change in provisions and employee benefits | 4,825 | (6,352) | 5,553 | 780 | (2,152) |
(176,471) | (11,526) | (143,124) | (19,483) | (129,846) | |
Dividends received from associates | 1,871 | 2,137 | 1,160 | 2,122 | 4,360 |
Interest received | 2,213 | 1,880 | 1,444 | 1,004 | 2,317 |
Income taxes paid | (15,534) | (7,263) | (10,625) | (4,768) | (14,983) |
Net cash generated from operating activities | 1,958,000 | 221,339 | 1,180,599 | 119,764 | 880,796 |
Cash flows from investing activities | |||||
Proceeds from sale of tangible and intangible assets, investments and affiliates | 2,287 | 2,994 | 1,783 | 1,645 | 6,717 |
Acquisition of tangible assets, intangible assets and investments | (464,487) | (7,480) | (331,489) | (3,919) | (42,641) |
Change in other investments and other receivables | 14,326 | (3,235) | 16,387 | (1,994) | 763 |
Net cash used in investing activities | (447,874) | (7,721) | (313,319) | (4,268) | (35,161) |
Six months ended | Three months ended | Year ended | |||
2021 | 2020 | 2021 | 2020 | 2020 | |
Cash flows from financing activities | |||||
Receipt of long-term loans and other long-term liabilities | 50,000 | 50,000 | |||
Issuance of share capital, net of issuance costs | 205,394 | ||||
Sale and lease back transactions | 9,052 | 652 | 9,052 | ||
Repayment of borrowings and lease liabilities | (692,426) | (141,031) | (502,023) | (77,474) | (336,225) |
Change in short term loans | (15,995) | 4,671 | (15,020) | 1,100 | 6,071 |
Dividend paid to non-controlling interests | (4,702) | (3,344) | (1,894) | (3,344) | (3,344) |
Interest and other financial expenses paid | (77,258) | (61,395) | (42,407) | (30,928) | (135,952) |
Net cash used in financing activities | (534,987) | (192,047) | (511,344) | (109,994) | (460,398) |
Net change in cash and cash equivalents | 975,139 | 21,571 | 355,936 | 5,502 | 385,237 |
Cash and cash equivalents at beginning of the period | 570,414 | 182,786 | 1,188,408 | 196,741 | 182,786 |
Effect of exchange rate fluctuation on cash held | (271) | (1,509) | 938 | 605 | 2,391 |
Cash and cash equivalents at the end of the period | 1,545,282 | 202,848 | 1,545,282 | 202,848 | 570,414 |
RECONCILIATION OF NET INCOME TO ADJUSTED EBIT | ||||
(U.S. dollars in millions) | ||||
Six months ended | Three months ended | |||
2021 | 2020 | 2021 | 2020 | |
Net income | 1,478 | 13 | 888 | 25 |
Financial expenses, net | 85 | 74 | 46 | 40 |
Income taxes | 278 | 7 | 224 | 4 |
Operating income (EBIT) | 1,841 | 94 | 1,158 | 69 |
Non-cash charter hire expenses | 1 | 4 | 0 | 2 |
Impairment of assets | 0 | 2 | 0 | 2 |
Expenses related to legal contingencies | 5 | 0 | 1 | 0 |
Adjusted EBIT | 1,847 | 100 | 1,159 | 73 |
Adjusted EBIT margin | ||||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||||
(U.S. dollars in millions) | ||||
Six months ended | Three months ended | |||
2021 | 2020 | 2021 | 2020 | |
Net income | 1,478 | 13 | 888 | 25 |
Financial expenses, net | 85 | 74 | 46 | 40 |
Income taxes | 278 | 7 | 224 | 4 |
Depreciation & amortization | 309 | 146 | 175 | 74 |
EBITDA | 2,150 | 240 | 1,333 | 143 |
Non-cash charter hire expenses | 1 | 0 | 1 | 0 |
Impairment of assets | 0 | 2 | 0 | 2 |
Expenses related to legal contingencies | 5 | 0 | 1 | 0 |
Adjusted EBITDA | 2,156 | 242 | 1,335 | 145 |
Adjusted EBITDA margin | ||||
RECONCILIATION OF NET CASH GENERATED FROM OPERATING ACTIVITIES TO FREE CASH FLOW | ||||
(U.S. dollars in millions) | ||||
Six months ended | Three months ended | |||
2021 | 2020 | 2021 | 2020 | |
Net cash generated from operating activities | 1,958 | 221 | 1,181 | 120 |
Net cash used in investing activities | (448) | (7) | (314) | (5) |
Free cash flow | 1,510 | 214 | 867 | 115 |
View original content:https://www.prnewswire.com/news-releases/zim-reports-record-financial-results-for-the-second-quarter-of-2021-301357816.html
SOURCE ZIM Integrated Shipping Services Ltd.
FAQ
What were ZIM's earnings results for Q2 2021?
What is ZIM's revenue for the second quarter of 2021?
What special dividend did ZIM declare in 2021?
What is ZIM's full-year guidance for 2021?
How did ZIM's carried volume change in Q2 2021?
