In a recent financial report, Israeli carrier ZIM disclosed a substantial net loss of USD 2.7 billion for the fiscal year 2023, primarily attributed to significant impairment charges incurred during the third quarter. Despite this setback, the company managed to mitigate its losses in the fourth quarter to USD 147 million, fueling optimism for a potential turnaround in profitability come 2024.
The carrier experienced a considerable decline in revenues, plummeting by 59% to USD 5.2 billion throughout the year. Operating losses, measured by adjusted EBIT, amounted to USD 422 million annually, with a final quarter EBIT loss of USD 49 million. However, ZIM remains hopeful for improved financial performance in the upcoming year, projecting adjusted EBIT ranging from negative USD 300 million to positive USD 300 million.
Anticipating a boost from heightened rates stemming from the Red Sea conflict, ZIM foresees stronger financials in the first two quarters of 2024. However, the company acknowledges potential challenges in the latter half of the year should the crisis be resolved by then. Amidst these projections, ZIM underscores the importance of cash preservation, highlighting the redelivery of chartered tonnage as a key strategy. In both 2023 and 2024, the company returned 32 vessels, with an additional 37 vessels slated for renewal in 2025.
With nearly 96% of its fleet on charter, ZIM grapples with high legacy hire rates signed during the COVID-19 pandemic. Average rates per twenty-foot equivalent unit (TEU) dipped by 63% in 2023, falling from USD 3,240 to USD 1,203. While yearly volumes remained flat at 3.28 million TEUs, a decline was evident in the fourth quarter, with liftings dropping to 786,000 TEUs compared to 823,000 TEUs the previous year.
The substantial net loss for the year primarily stemmed from a USD 2.06 billion impairment charge on assets incurred during the third quarter, with no further impairment costs recorded in the fourth quarter. Looking ahead, ZIM anticipates returning to profitability from 2025 onwards, buoyed by lower per-TEU costs resulting from future newbuildings.
Despite a 3% decline in TEUs carried in 2023, below the market average, ZIM sets its sights on double-digit volume growth in 2024. The company plans to achieve this through the deployment of upsized vessels across various trade routes, with a particular focus on attracting new customers in the US through LNG propulsion services aimed at reducing carbon footprints. Targeted growth areas include the transpacific, Asia-US East Coast, and Latin America trades, along with backhaul US to Asia services. Additionally, ZIM aims to expand its operated fleet by a double-digit percentage in 2024, signaling confidence in its strategic initiatives amidst challenging market conditions.
Source: ZIM, Alphaliner
