The global economic picture has changed somewhat since companies reported their fourth quarter 2021 results and the current reporting season, for the first quarter of 2022, but ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) has maintained a positive trend despite the upsets.
ZIM is benefitting from an unprecedented boom in its business as a result of the worldwide supply chain difficulties that followed on from the Covid pandemic, causing record demand for shipping services and sharp price rises. ZIM beat the analysts’ estimates for the first quarter of 2022 and it has raised its annual guidance. Whereas previously ZIM estimated that its revenue for 2022 would be similar to that for 2021, it now sees it being higher.
ZIM, which in the past year has become the most profitable company in Israel, reports a threefold increase in quarterly net profit, from $590 million in the first quarter of 2021 to $1.7 billion in the first quarter of 2022, which is similar to the profit reported for the previous quarter.
“If I had to give it a headline, I’d stress the fact that since our flotation until today we have distributed dividends that are fifteen times the amount we raised just a year and four months ago, and the company’ market cap has risen several times over,” says ZIM CEO Eli Glickman. “The emphasis is on the phenomenal dividend to the investors, there’s no company in the world to compare. I recently met the CEO of the New York Stock Exchange and she told me there was no company like ZIM on the exchange.”
Revenue in the quarter grew 113% in comparison with the corresponding quarter of 2021 to $3.7 billion, higher than the market estimate of $3.47 billion. Carried volume in the first quarter was 859 thousand TEUs (twenty foot equivalent units), representing a year-over-year increase of 5%, and average freight rate per TEU in first quarter was $3,848, representing a year-over-year increase of 100% (in the previous quarter the rate was $3,600). Adjusted EBITDA for the first quarter was $2,533 million, representing a year-over-year increase of 209%.
ZIM generated cash flow of $1.66 billion from regular activities and free cash flow of $1.48 billion. At the end of the first quarter, the company had net cash of $779 million. The company mainly uses its cash to distribute generous dividends to shareholders. For the first quarter, ZIM will pay a dividend of $2.85 per share, 20% of its profit for the quarter.
ZIM’s most prominent shareholder is Kenon Holdings, controlled by Idan Ofer. The company has raised its EBITDA guidance for 2022 from $7.1-7.5 billion to $7.8-8.2 billion. In 2021, EITDA was $6.6 billion.
ZIM has a market cap of $7.8 billion, representing a return of 333% since its flotation in January 2021, but 16% below the peak recorded two months ago.
Published by Globes, Israel business news – en.globes.co.il – on May 18, 2022.
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