ZIM faces bleak outlook as weakness in container shipping continues Ship’s crew

From Alex Whiteman (The Loadstar) –

Continued weakness in container shipping has forced Israeli company Zim to drastically reassess its full-year performance and now expects a loss that far exceeds analysts’ forecasts.

The airline today updated its forecast and announced that it is revising 2023 Ebitda down to between US$1.2-1.6 billion from US$1.8-2.2 billion, with Ebit at a profit adjusted to a loss of between $100 million and $500 million from as much as $500 million, significantly more than the $95 million loss analysts had suggested in May.

CEO Eli Glickman said: “Short-term conditions in the container shipping market remain challenging and demand is likely to remain subdued for the remainder of the year.

“While our second quarter results are broadly in line with our expectations, we no longer expect freight rates to improve in the second half of 2023, in line with seasonality, as previously anticipated.”

In a statement, the Israeli carrier said the updated forecasts were primarily due to continued pricing weakness across all of its trades, particularly the trans-Pacific.

Optimism for a recovery in interest rates remains muted across the industry and Zim, who had been optimistic in its Q1 presentation, now seems to have accepted that the weak market is likely to continue as demand has remained subdued and at a low led to volume growth.

“We will continue to manage and streamline our fleet and services to maximize our liquidity while staying true to our customer-centric approach,” added Mr. Glickman.

“As we look to the future, we believe that our low-cost and fuel-efficient new build capacity, particularly new LNG vessels, will significantly improve our cost structure and competitive position, enabling us to deliver sustainable value over the long term.”

After posting a net income of $1.7 billion in the first quarter of 2022, Zim posted a net loss of $58 million as a 10% decline in volume over the same period this year translated into a 63% drop in sales to 1, $33 billion.

Still, in May the company reiterated full-year EBIT guidance of $100-500 million, in contrast to analysts who had forecast a $95 million loss. Jeffries described the confirmation as “surprising” and appears to have been based on a hypothetical US inventory build-up, rather than a recovery in demand.

The optimism at the end of May was in marked contrast to that of all other airlines. Companies like Hapag-Lloyd, Maersk and Yang Ming (all of which posted gains) expected the first quarter to be their strongest.

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