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ZIM Reports Record Financial Results for the Second Quarter of 2021

18-Aug-2021
Generates Highest Ever Quarterly Net Income of $888 Million and Adjusted EBITDA of $1.34 Billion
Significantly Increases 2021 Guidance to Between $4.8 Billion and $5.2 Billion of Adjusted EBITDA and Between $4.0 Billion to $4.4 Billion of Adjusted EBIT
Second Half 2021 Results Expected to Exceed First Half Results
Q2 2021 Carried Volume Increased 44% Year Over Year, Significantly Higher than Market Growth

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.

Zim Integrated Shipping Services Ltd Logo

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 of 820%
  • 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 of 200%
  • 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 of 119%
  • 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 44% year-over-year, substantially higher than market growth."

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 $1.72 billion."

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 30%-50% of 2021 net income, on top of the $238 million, or $2.00 per share, special dividend payable in September 2021. Our outlook for the remainder of 2021 and into 2022 is very positive and we are excited about our strategy to further enhance our position as an innovative digital leader of seaborne transportation and logistics services." 

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 $2.38 billion for the second quarter of 2021, compared to $795 million for the second quarter of 2020, primarily driven by an increase in revenues from containerized cargo, reflecting increases in freight rates as well as in carried volume.

Operating income (EBIT) for the second quarter of 2021 was $1.16 billion, compared to $69 million for the second quarter of 2020.

Net income for the second quarter of 2021 was $888 million, compared to $25 million for the second quarter of 2020. Net income for the quarter reflected a tax expense of $224 million.

Adjusted EBITDA was $1.34 billion for the second quarter of 2021, compared to $145 million for the second quarter of 2020.  Adjusted EBIT was $1.16 billion for the second quarter of 2021, compared to $73 million for the second quarter of 2020. Adjusted EBITDA and Adjusted EBIT margins for the second quarter of 2021 were 56% and 49%, respectively. This compares to 18% and 9% for the second quarter of 2020, respectively.

Net cash generated from operating activities was $1.18 billion for the second quarter of 2021, compared to $120 million for the second quarter of 2020.

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 $2,341 for the second quarter of 2021, compared to $1,071 for the second quarter of 2020.

Financial and Operating Results for the Six Months Ended June 30, 2021
Total revenues were $4.13 billion for the first half of 2021, compared to $1.62 billion for the first half of 2020, primarily driven by an increase in revenues from containerized cargo, reflecting increases in freight rates as well as in carried volume.

Operating income (EBIT) for the first half of 2021 was $1.84 billion, compared to $94 million for the first half of 2020.

Net income for the first half of 2021 was $1.48 billion, compared to $13 million for the first half of 2020. Net income for the first half of 2021 reflected a tax expense of $278 million.

Adjusted EBITDA was $2.16 billion for the first half of 2021, compared to $242 million for the first half of 2020. Adjusted EBIT was $1.85 billion for the first half of 2021, compared to $100 million for the first half of 2020. Adjusted EBITDA and Adjusted EBIT margins for the first half of 2021 were 52% and 45%, respectively. This compares to 15% and 6% for the first half of 2020, respectively.

Net cash generated from operating activities was $1.96 billion for the first half of 2021, compared to $221 million for the first half of 2020.

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 $2,145 for the first half of 2021, compared to $1,081 for the first half of 2020.

Liquidity and Cash Flows
ZIM's cash and cash equivalents increased by $975 million from $570 million at December 31, 2020 to $1.55 billion at June 30, 2021. Capital expenditures totaled $331 million for the second quarter of 2021, compared to $4 million for the second quarter of 2020. Net debt decreased by $453 million from $1.24 billion as of December 31, 2020 to $783 million as of June 30, 2021. ZIM's net leverage ratio as of June 30, 2021 was 0.3x, compared to 1.2x as of December 31, 2020.

Early Redemption of Notes
In June 2021, the Company redeemed 100% of its Series 1 and 100% of its Series 2 unsecured notes due 2023 at an aggregate principal amount of $349 million, in accordance with the terms of the indenture governing the notes.

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 $238 million, or $2.00 per ordinary share. The special cash dividend will be paid on September 15, 2021, to all holders of record of ordinary shares as of August 25, 2021. The special dividend is supplemental to ZIM's previously communicated 2021 annual dividend guidance, whereby the Company expects to distribute 30-50% of 2021 net income in 2022, subject to Board approval.

Updated Full-Year 2021 Guidance
The Company increased its full-year guidance and expects to generate in 2021 Adjusted EBITDA of between $4.8 billion and $5.2 billion and Adjusted EBIT of between $4.0 billion to $4.4 billion.

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
June 30,

Three months ended
June 30,

Year ended
December 31,


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
June 30,

Three months ended
June 30,

Year ended
December 31,


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
June 30,

Three months ended
June 30,

Year ended
December 31,


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
June 30,

Three months ended
June 30,


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

45%

6%

49%

9%

 

 

RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA

(U.S. dollars in millions)





Six months ended
June 30,

Three months ended
June 30,


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

52%

15%

56%

18%

 

 

RECONCILIATION OF NET CASH GENERATED FROM OPERATING ACTIVITIES TO FREE CASH FLOW

(U.S. dollars in millions)





Six months ended
June 30,

Three months ended
June 30,


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

 

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SOURCE ZIM Integrated Shipping Services Ltd.

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