ZIM Reports Record Financial Results for the Second Quarter of 2021
HAIFA, : ZIM Integrated Shipping Services Ltd. a global container liner shipping company, announced today its consolidated results for the three and six months ended June 30, 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
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.
Source : ZIM
