Why Is Israel-Based Cargo Shipping Company ZIM Integrated Stock Surging Today?

ZIM Integrated Shipping Services Ltd ZIM shares are trading higher after it reported a second-quarter sales increase of 48% Y/Y to $1.93 billion, beating the consensus of $1.80 billion.

Israel-based cargo shipping company’s carried volume in the quarter was 952 thousand TEUs, up 11% Y/Y. The average freight rate per TEU was $1,674 (+40% Y/Y).

Adjusted EBITDA escalated 179% Y/Y to $766 million, with margins of 40% vs. 21% in the prior year quarter.  

The Haifa, Israel-based company generated an EPS of $3.08, vs a loss of $1.79 last year, beating the consensus of $1.66.

ZIM’s total cash position decreased by $351 million from $2.69 billion as of December 31, 2023, to $2.34 billion as of June. Operating cash flow for the six months was $1.10 billion, compared to $520 million a year ago. 

ZIM’s net leverage ratio was 2.0x as of June-end, compared to 2.2x as of December 31, 2023. Capital expenditures were $66 million during the quarter versus $26 million a year ago.

Dividend: The Board of Directors declared a cash dividend per share of $0.93, payable on September 5, to shareholders of record as of August 29.

Eli Glickman, ZIM President & CEO, said, “During the quarter, we benefitted from ZIM’s strategic decision to increase the Company’s spot market exposure in the Transpacific trade. This has enabled us to capture significant upside in a rate environment that has been elevated for longer than anticipated.”

“We expect our results in the second half of 2024 to be better than in the first half of the year, driven by continued supply pressure from the Red Sea crisis, combined with current favorable demand trends.”

“By year’s end, our ongoing newbuild program will be complete, as we receive delivery of the remaining eight out of 46 modern, fuel-efficient containerships that we secured, including 28 LNG-powered vessels. We are on track to achieve our double-digit volume growth target in 2024 and well positioned to drive profitable growth ahead.”

2024 Outlook: ZIM raised the adjusted EBITDA outlook to $2.6 billion-$3 billion (from $1.15 billion-$1.55 billion) and adjusted EBIT to $1.45 billion-$1.85 billion (from zero-$400 million prior).

Investors can gain exposure to the stock via Vident International Equity Strategy ETF VIDI.

Price Action: ZIM shares are up 17% at $22.29 premarket at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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