Why Is ZIM Integrated Shipping Services Stock Sinking Today?

ZIM Integrated Shipping Services Ltd ZIM reported a fourth-quarter fiscal 2023 sales decline of 44.9% Y/Y to $1.21 billion, missing the consensus of $1.28 billion.

The Haifa, Israel-based company generated an EPS loss of $(1.23), beating the consensus of $(1.29).

Carried volume in the quarter was 786 thousand TEUs, vs. 823 thousand TEUs a year ago. The average freight rate per TEU was $1,102 (-48% Y/Y).

Adjusted EBITDA fell 80.5% Y/Y to $190 million, with margins of 15.8% compared to 44.5% a year ago.  

ZIM’s total cash position decreased by $1.92 billion from $4.61 billion as of December 31, 2022, to $2.69 billion as of December 31, 2023.

Operating cash flow for the quarter was $162 million, compared to $1.07 billion a year ago. For the fiscal, operating cash flow totaled $1.02 billion versus $6.11 billion in 2022.

ZIM’s net leverage ratio as of December 31, 2023, was 2.2x, compared to 0.0x as of December 31, 2022.

Capital expenditures were $116 million during the quarter versus $345 million a year ago.

“Our cost per TEU is declining and we anticipate additional improvements as our 22 outstanding newbuilds are delivered during the remainder of the year. We continue to review our services to best address customers’ evolving needs and position ZIM to capitalize on attractive growth opportunities,” commented Eli Glickman, ZIM President & CEO.

“Looking ahead, we intend to continue to take decisive steps to further benefit from our strategic transformation and expect ZIM to emerge in a stronger position than ever in 2025 and beyond,” added Glickman.

2024 Outlook: ZIM expects to generate Adjusted EBITDA of $850 million-$1.450 billion and Adjusted EBIT between a loss of $(300) million and earnings of $300 million.

Price Action: ZIM shares are trading lower by 13.9% at $10.03 on Wednesday.

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