ZIM reports record financial results for the 3rd Qrtr of 2021
enerated Highest Ever Quarterly Net Income of $1.46 Billion and Adjusted EBITDA[1] of $2.08 Billion
Transitioned to Quarterly Dividend Payout, Declared Q3 2021 Dividend of $2.50 per Share, Representing Approx. 20% of Quarterly Net Income; 30-50% of Total 2021 Net Income Expected to be Distributed in 2022
Significantly Increased 2021 Guidance to Between $6.2 Billion and $6.4 Billion of Adjusted EBITDA and Between $5.4 Billion to $5.6 Billion of Adjusted EBIT[2]
Q3 2021 Carried Volume Increased 16% Year Over Year, Significantly Higher than Market Growth
HAIFA : ZIM Integrated Shipping Services Ltd. , a global container liner shipping company, announced today its consolidated results for the three and nine months ended September 30, 2021.
Third Quarter 2021 Highlights
- Net income for the third quarter of 2021 was $1.46 billion or $12.16 per diluted share[3], compared to $144 million or $1.36 per diluted share in the third quarter of 2020, a year-over-year increase of 913% and 794%, respectively
- Adjusted EBITDA for the third quarter of 2021 was $2.08 billion, compared to $262 million in the third quarter of 2020, a year-over-year increase of 693%
- Operating income (EBIT) for the third quarter of 2021 was $1.86 billion, compared to $189 million in the third quarter of 2020, a year-over-year increase of 884%. Reconciliation items between operating income (EBIT) and Adjusted EBIT in the third quarter of 2021 were negligible
- Revenues for the third quarter of 2021 were $3.14 billion, compared to $1.01 billion in the third quarter of 2020, a year-over-year increase of 210%
- ZIM carried 884 thousand TEUs in the third quarter of 2021, a year-over-year increase of 16%
- The average freight rate per TEU in the third quarter of 2021 was $3,226, a year-over-year increase of 174%
- Net leverage ratio[1] of 0.0x at September 30, 2021, compared to 1.2x at December 31, 2020
- Declared a transition to interim quarterly dividend payout of approximately 20% of quarterly net income, with the fourth quarter dividend payout to total 30-50% of the annual net income, including the interim quarterly dividends; declared approximately $296 million, or $2.50 per share Q3 dividend (representing approximately 20% of Q3 2021 net income) to be paid on December 27, 2021
- Announced the strategic long-term chartering agreement and option exercise with Seaspan for a total of 15 x 7,000 TEU LNG-fueled vessels, further demonstrating ZIM’s commitment to reducing its carbon footprint
- During the third quarter of 2021 and subsequent to quarter end, ZIM purchased eight (8) second-hand vessels for total consideration of approximately $355 million
Eli Glickman, ZIM President & CEO, stated, “We are very proud of ZIM’s significant accomplishments since our IPO earlier this year. The company’s continued outstanding performance is a direct result of our team’s strong execution and success proactively capitalizing on both the highly attractive market and our differentiated approach. The exceptional results we generated in the third quarter, reflect our highest ever quarterly revenues, adjusted EBITDA, net profit and operating cash flow. Importantly, we have once again delivered industry-leading margins, outperforming the sector’s average.”
Mr. Glickman added, “During a time when we have posted record quarterly results, we are pleased to further allocate capital to enhance our commercial prospects and unlock shareholder value. Complementing our success securing our operating fleet and equipment to best serve our customers, we have distributed a $2.00 per share special dividend in September 2021 and we are now transitioning to paying quarterly dividends to provide shareholders with an immediate and more frequent return. Accordingly, we will be paying in December 2021 a $2.50 per share interim dividend for the third quarter, representing approximately 20% of quarterly net income. Based on our expectation to distribute 30-50% of 2021 net income, we are poised to return significant capital to shareholders in 2022.”
Mr. Glickman concluded, “Reflecting ZIM’s strong outlook and extremely positive container liner market fundamentals, we have once again raised our full-year 2021 guidance. As an innovative digital leader of seaborn transportation and logistics services, we are well positioned for the future. Going forward, our unrelenting focus remains on further executing our global-niche strategy to achieve superior long-term profitability, while maintaining significant fleet flexibility, promoting our ESG values as we provide a best-in-class customer experience and taking advantage of compelling growth opportunities.”
Summary of Key Financial and Operational Results
| Q3’21 | Q3’20 | 9M’21 | 9M’20 | |
| Carried volume (K-TEUs) | 884 | 762 | 2,623 | 2,042 |
| Average freight rate ($/TEU) | 3,226 | 1,176 | 2,510 | 1,116 |
| Revenue ($ in millions) | 3,136 | 1,013 | 7,262 | 2,631 |
| Operating income (EBIT) ($ in millions) | 1,859 | 189 | 3,700 | 283 |
| Profit before income tax ($ in millions) | 1,821 | 148 | 3,577 | 169 |
| Net income ($ in millions) | 1,463 | 144 | 2,941 | 158 |
| Adjusted EBITDA ($ in millions) | 2,080 | 262 | 4,236 | 504 |
| Adjusted EBIT ($ in millions) | 1,859 | 189 | 3,706 | 289 |
| Adjusted EBITDA margin (%) | 66 | 26 | 58 | 19 |
| Adjusted EBIT margin (%) | 59 | 19 | 51 | 11 |
| Net cash generated from operating activities ($ in millions) | 2,008 | 245 | 3,966 | 466 |
| Earnings per share (fully diluted) ($) | 12.16 | 1.36 | 24.79 | 1.47 |
| Free cash flow[1] ($ in millions) | 1,720 | 237 | 3,216 | 454 |
| Sept 21 | Dec 20 | |||
| Net debt[1] ($ in millions) | 22 | 1,236 |
Financial and Operating Results for the Third Quarter Ended September 30, 2021
Total revenues were $3.14 billion for the third quarter of 2021, compared to $1.01 billion for the third 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 third quarter of 2021 was $1.86 billion, compared to $189 million for the third quarter of 2020. Operating margin for the third quarter of 2021 was 59%, compared to 19% in the third quarter of 2020.
Net income for the third quarter of 2021 was $1.46 billion, compared to $144 million for the third quarter of 2020. Net income for the third quarter of 2021 included a tax expense of $358 million.
Adjusted EBITDA was $2.08 billion for the third quarter of 2021, compared to $262 million for the third quarter of 2020. Adjusted EBIT was $1.86 billion for the third quarter of 2021, compared to $189 million for the third quarter of 2020. Adjusted EBITDA and Adjusted EBIT margins for the third quarter of 2021 were 66% and 59%, respectively. This compares to 26% and 19% for the third quarter of 2020, respectively.
Net cash generated from operating activities was $2.01 billion for the third quarter of 2021, compared to $245 million for the third quarter of 2020.
ZIM carried 884 thousand TEUs during the third quarter of 2021, compared to 762 thousand TEUs in the third quarter of 2020. The average freight rate per TEU was $3,226 for the third quarter of 2021, compared to $ 1,176 for the third quarter of 2020.
Financial and Operating Results for the Nine Months Ended September 30, 2021
Total revenues were $7.26 billion for the first nine months of 2021, compared to $2.63 billion for the first nine months 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 nine months of 2021 was $3.70 billion, compared to $283 million for the first nine months of 2020. Operating margin for the first nine months of 2021 was 51%, compared to 11% in the first nine months of 2020.
Net income for the first nine months of 2021 was $2.94 billion, compared to $158 million for the first nine months of 2020. Net income for the nine months of 2021 included a tax expense of $636 million.
Adjusted EBITDA was $4.24 billion for the first nine months of 2021, compared to $504 million for the first nine months of 2020. Adjusted EBIT was $3.71 billion for the first nine months of 2021, compared to $289 million for the first nine months of 2020. Adjusted EBITDA and Adjusted EBIT margins for the first nine months of 2021 were 58% and 51%, respectively. This compares to 19% and 11% for the first nine months of 2020, respectively.
Net cash generated from operating activities was $3.97 billion for the first nine months of 2021, compared to $466 million for the first nine months of 2020.
ZIM carried 2,623 thousand TEUs during the first nine months of 2021, compared to 2,042 thousand TEUs in the first nine months of 2020. The average freight rate per TEU was $2,510 for the first nine months of 2021, compared to $1,116 for the first nine months of 2020.
Liquidity and Cash Flows
ZIM’s total cash position (which includes cash and cash equivalents and investments in bank deposits and other investment instruments) increased by $2.18 billion from $572 million as of December 31, 2020 to $2.76 billion at September 30, 2021. Capital expenditures, net totaled $288 million for the third quarter of 2021, compared to $8 million for the third quarter of 2020. Net debt decreased by $1.21 billion from $1.24 billion as of December 31, 2020 to $22 million as of September 30, 2021. ZIM’s net leverage ratio as of September 30, 2021 was 0.0x, compared to 1.2x as of December 31, 2020.
Dividend Policy
Commencing from the third quarter of 2021, the Company intends to distribute a dividend to its shareholders on a quarterly rather than on an annual basis. The quarterly dividend will be paid at a rate of approximately 20% of the net income derived during such fiscal quarter. The dividend payable on the fourth quarter of the fiscal year is expected to be at such rate that the cumulative annual dividend amount to be distributed by the Company (including the interim dividends) will total 30-50% of the annual net income (including in respect to 2021). All future dividends are subject to the Company’s Board discretion and to the restrictions provided by Israeli law.
In accordance with the new dividend policy, the Company’s Board of Directors declared a cash dividend of approximately $296 million, or $2.50 per ordinary share, reflecting approximately 20% of Q3 2021 net income, to be paid on December 27, 2021, to holders of the ordinary shares as of December 16, 2021.
Long-Term Chartering Agreements
In July 2021, the Company announced a second strategic agreement with Seaspan Corporation for the long-term charter of ten 7,000 TEU liquefied natural gas (LNG) dual-fuel container vessels. Subsequently, in September, the Company announced the exercise of its option to long-term charter five additional 7,000 TEU LNG dual-fuel container vessels from Seaspan, so that the total number of vessels to be chartered under this agreement is fifteen (15). These 15 vessels are intended to be deployed across ZIM’s various global trades. ZIM first strategic agreement with Seaspan was announced in February 2021, under which the Company entered into a long-term charter agreement for ten 15,000 TEU LNG dual-fuel container vessels, intended to serve on its Asia to US East Coast trade.
Second-hand Vessel Purchases
During the third quarter of 2021 and subsequent to quarter end, the Company purchased eight (8) second-hand vessels (built between 2007-2010) in a number of separate transactions. The vessels purchased include five 4,250 TEU vessels, one 2,553 TEU vessel and two 1,100 TEU vessels for a total consideration of approximately $355 million.
Updated Full-Year 2021 Guidance
The Company increased its full-year guidance and expects to generate in 2021 Adjusted EBITDA of between $6.2 billion and $6.4 billion and Adjusted EBIT of between $5.4 billion to $5.6 billion.
Use of Non-IFRS Measures in the Company’s 2021 Guidance
The Company only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking Adjusted EBITDA or Adjusted EBIT to IFRS measures, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, in particular because such reconciling items used to calculate projected net income (loss) may vary dramatically based on actual events. The Company is not able to forecast on a IFRS basis with reasonable certainty all reconciliation items needed in order to provide a IFRS calculation of projected net income (loss) or EBIT at this time. The amount of these reconciliation items can vary and may be material and, therefore, could result in projected IFRS measures being materially different than projected Adjusted EBITDA or Adjusted EBIT.
Conference Call Details
Management will host a conference call and webcast (along with a slide presentation) to review the results and provide a corporate update today at 8:00 AM ET.
To access the live conference call by telephone, please dial the following numbers: United States +1-855-265-6958 or +1-718-705-8796; Israel +972-3-721-9662; or UK/international +44-1-212-818-004. The call (and slide presentation) will be available via live webcast through ZIM’s website, located at the following link. Following the conclusion of the call, a replay of the conference call will be available on the Company’s website.