ZIM - Earnings call transcript Q1 2024 | ZIM Integrated Shipping Services Ltd.

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Operator

Thank you for standing by, and welcome to the ZIM Integrated Shipping Services First Quarter 2024 Earnings Conference Call any background noise. [Operator Instructions]. I'd now like to turn the conference over to Elana Holzman, Head of Investor Relations.

You may begin.

Elana Holzman

Thank you, operator, and welcome to ZIM's First Quarter 2024 Financial Results Conference Call.

call Xavier Eli Destriau, the and ZIM's on and CEO; CFO. me today Glickman, are President Joining

events Before and we will that caution begin, events and that the regarding during assumptions I only predictions, such or would that like course expectations, differ, current including or We that company's this statements to results. of are We results reflect call, our or reasonable. may you we projections make actual believe statements the forward-looking expectations future remind expectations you to wish materially.

consider You referred obligation files would risk kindly these time, Exchange CEO, filed language At annual are this to statements. like cautionary Securities Eli Form to update over in described with the the to Glickman. Commission, company undertake the the SEC to I the on factors XXXX our report forward-looking documents and including the March turn call XXXX. and in ZIM's Eli? XX-F no with We

Eliyahu Glickman

Elana, and market conditions Thank leverage ZIM of strong results. with the solid we with coupled the QX We welcome, execution XXXX delivered #X. you, Based for team momentum. and of globally, year positive everyone. we Slide our 'XX the improved, ZIM our conditions, the financial such, on full now and be remainder as year a better than market has expect 'XX current to outlook performance results. began

stronger and of which larger We volume Adjusted was and billion net and first in adjusted margin $XXX and to EBITDA the vessels our the spot XX%. income reflects reflecting operate fleet ZIM outperforming improve structure margin global of our of EBIT XX% will EBIT upscale #X. delivered that of believe revenue in $X.XX we million. disruption and million, off, market. EBITDA adjusted resulted was million, adjusted to $XX in $XXX logistics is expectations, rates, supply from chain.Slide the cost plan paying strategic 'XX, quarter Our growth earning achieve our we

$X.XX at strong. billion of cash total quarter remains position Our end

results Sea QX rates reflect from lows of as the â€˜XX is We've to the absorbed. the industry. significantly nature not Red container and have trade. dynamic continue in shipping market in being the freight November global Our eased seen increase Today, tensions overcapacity distract

look expect for higher we longer to forward, originally rates freight As we remain anticipated. than

While directly to cannot this does rate previously predict experience not on we by increases, have impacted to constraint in traits, the which end, weeks, this in when Sea pressure remand may a seem recent be cause sight. certain the we solution increases will and disruption additional are and equipment disruption spreading the recent added not spot rate which did seen to not be of supply increased Red indication trend. of Moreover,

Going to Slide #X.

environment Therefore, raising stronger year full and range in impacting $XXX 'XX are to between of the $X.XX now million guidance expect now for rate year Given more we more to our this outlook and adjusted million. the positive. $X $X.XX generate billion is EBIT trades, to our EBITDA billion adjusted

has of declared a dividend million of dividend $X.XX a total net of Board Directors a of quarterly our which our per As income, results. or for payout account of of share QX policy, per provides on XX% $XX

next a well. of rates year still drove and remind to demand until be recently and year witnessing market likely are significant improved supply the growth support to from primarily seen It bare that in supply-driven. disruptions as and rates point dynamics our this growth remains has remainder we scenario Overall While were sustainable volatile financial you extent, extremely lesser â€˜XX. been like with would perspective, up significantly to is outpacing avoided case 'XX, for the market to currently the a rather which whether we to the is demand that freight deliveries

half of more this new irrespective challenging This changed. the not in supply-demand has of to market of the year, crisis the industry for fourth that large are likely the and as out scenario will expectation to Sea our duration play will is has It longer-term view. the 'XX.We we revert The adversely Sea will affect face Red builds, Red in the resolved, one vessels third more capacity likely remains a that the our our a view begun results crisis second delivered. particularly such, As quarters. maintained

the our to driving our the will assume second discuss CFO, be additional guidance first might that than of â€˜XX in Xavier, We half continue 'XX prepared comments. weaker factors half. his

provide strategic over objective the an to him, operational in thus to would ZIM update I progress like commercial highlight 'XX. far Before and call and I turn executing execution,

Going to Slide #X.

tangible Our and results. produce has underway well transformation to begun is

transformation the operations. already deploying train. which are competitive is our as us, are executed the our that ships, renewal delivered strategic transformation build Coast continues more vessels, Today, emerge new been a XX and fleet pleased LNG-powered. XX ZIM to a and fleet XX with is X,XXX and progress on are We structure, benefits. The of TEU East new LNG-powered to beyond all which XX,XXX, confident X progress in respect we pillar including our cost our We in U.S. efficient position Asia of with vessels fleet of TEU container build of enable very LNG out XX,XXX our deliver to renewal total secured 'XX are to and vessels ZIM stronger will have and program primary incremental to

structure our improved growth. long-term cost support fleet new Our profitable and

at cost vessels are fuel-efficient, charter more vessels reduce new capacity. suited per we less and expensive the which more TEU these continues to Importantly, older, efficient are and newbuild replacing larger This cost-effective in trends better modern, these to our operate.

we seeing meet to cost per TEU growth continue our as we improvement forward, gradual Moving expect volume targets.

program our reduce LNG our our our to we pleased drop long-term Already charter reports. from the impact we published operate new growth, use over addition making we a map, our today, and for structure world. climate improving and is road we In of central addresses XX% demand operated new an fight and capacity capacity operations XX% is objective compared our of LNG fuels. is change. achieved value intensity once environmental ZIM ESG tonnage, Sustainability increasing power, The the existing of a core of our worth LNG benefit of be X more expected for lowest have deliver our from builds renewal driven the are in operations powered, operated environmental annual is intensity fleet carbon cost in our of and recently be addresses building. fleet mentioning to and enabling which various our housing It and ESG the year, prior fleet XX% of sustainable terms help carbon emissions. a 'XX, are the our cars expected our of to to our among stakeholders new capacity receive XX% by proactive ZIM Approximately cut again.Next ZIM, This carbon all part replace to alone was vessels significantly as approach. new year. in older ESG vessels, our of In a greenest alternative in perspective

vessel to with added decreased regulation. speed vessels comply also routes to We and emerging

our We than is one the X we'll our progress reducing way that We to committed practice long-term intensity burn. At 'XX well our by corporate on to levels baseline. aligning for emissions of our create and also â€˜XX set made XXXX, responsible in Thus we are net we vessels 'XX stakeholders. demand of versus all IMO. far, are the of sustainable size in by carbon target and more the of the will ESG-focused to fleet on reducing prioritize had rationalizing target minimize to XX% ongoing process, we continue for a ambitious up the the GHG recognize our fleet the Operationally, course with of and renewal We by be of proud remain we beginning reaching redelivered to XX to 'XX. an by focused value our anticipate XX our and have this implementation vessels year. strategies year, the over remain promoting remainder a total redelivered cash

agent of The commercial to Turning of ZIM strategy our next has nature well. to continued network our serve services.

the larger commercial Transpacific, QX, vessels. carrier volume demand. to as During East maintain quarter, new the open We lines continued customer the we our In for changing strategic this only our and fuel grew to position Vancouver. on adapt on our unique LNG U.S. first vessels our and to network capacity ZIM LA leveraging call to with we trade Coast

In this fact, different we services X on operate LNG trade. in vessels

and several emissions at and in saw continue supports America. believe carbon As growing [indiscernible] We our our QX. competitive pleased â€˜XX shippers trade, trade we differentiated new also volume are offering position volume this that to a on reduce in growth opened pathway offer target.We this we Latin our lines able to enhances expand significantly in to network our

been on potential. please? On a detailed we discussed well us revised the have as profitability â€˜XX As market Xavier, focal additional CFO, point this I discussion our will Xavier, see we guidance the has results, turn over America to our note, for of for a previously, our more and financial long-term call Latin growth where environment. as comments

Xavier Destriau

the our highlights. Thank financial a billion the as mentioned, the X, that revenue quarter XXXX, improved in ensued first of freight and ZIM first year. Eli generated Slide quarter of from results you. of red And increase key operational quarter disruptions. financial rates to compared sea again, welcome, the And mostly reflect we XX% On present everyone. $X.X last first

car freight increase quarter in revenue mostly XXXX. $XXX rate cargo, compared our prior million and average year-over-year XX% for was increase which quarter. a of per the from the first from of Our quarter totaled non-containerized X% the a TEU $XXX Total reflects services, carrier $X,XXX to million

the the quarter. due we the longer to current up While in Cape vessels in the slightly are of operated current revenues Good voyages quarter, only around more Hope

totaled free the $XXX flow first quarter in XXXX. first the of compared in $XXX Our million quarter million cash to

vessels Total by to net prior balance Turning the of with year-end, mainly since to sheet. the the larger $XXX charter due debt effect incoming durations. million longer-term increased

car in of number XXX of QX which this fewer March we operate a vessels, vessels X operated resulted compared scheduled we Regarding remind from operate would carriers XXX new to even builds to and has you year. mid-March. slight will or the call The X XXXX our fleet, grow are the continue as capacity I of like out while vessels, to decrease as our of vessels in our vessels. delivery from currently XX of continue may grown redelivery similar and earnings that to

cost-effective strategic to TEU. are vessels, suited the in contributing smaller less trades tonnage replacing are vessels being cost-efficient which they with tonnage, again, newbuild enhancing our more per deployed better are positioning. larger, lower also to cost these unit thereby We Moreover,

LNG the XX X the vessels and joined our LNG have of to has XX call, including and XX,XXX new today's TEU TEU of vessels, X XX TEU X,XXX fleet, vessels, X,XXX beam, committed TEU vessels of ships. team wide X As X,XXX smaller build XX,XXX

Excluding chartered is capacity, the down mid-March. new build our now the months X.X months tonnage continues to remaining XX.X and of in duration compared trend average to

a this period. XXXX total XX have expected charter up We as builds delivery in new of during of of the XX the compared to remainder vessels renewal for

XX In addition, fleet XXXX. this size we gives previously ample our ensure have we as opportunities. And for to matches highlighted, another renewal vessels up flexibility in us market the

compared quarter QX margin Adjusted margin quarter to in Turning adjusted both to shareholders of Slide as reflecting declared shareholders, of additional $XX payout X. reflects million or Net periods. Directors million and in EBITDA same compared metrics of as to We net million our a income to now of million an of $XXX of policy. current dividend income $XX was QX compared or a for committed the to $XX EBIT EBITDA quarter year. $XX Board net which such, was Adjusted in to million, QX a the XXXX. of last loss financial a capital XX% returning in million first our of million XX% in remain XXXX, $X.XX the $XXX share $XXX per QX to XX% of dividend loss first was per EBIT on do an total

year. during the to We carried XX. quarter ahead to growth period first last XXX,XXX compared X%. That XX%, of in of same slightly now is TEUs TEUs an increase Turning of XXX,XXX the market Slide

and As in this during volume growth on year-over-year, volume remainder also XXXX volumes Transpacific XXX% vessels Eli volume to driven our grew capacity growth discussed, see that as XX% the see Significant we our grew we of in additional the in new expect year-over-year QX Transpacific and capacity. in our we attributable by Latin the trade. growth to presence We of continue participate of lines. to was our continued to America expanded upsize trade. opportunities larger

present bridge. flow we our cash Next,

million, EBITDA flow $XXX mostly the is activities. adjusted of remember million significant our items lease here the million $XXX of of related lease For options is we X quarter however, vessels debt flow included generated converted important, of million vessels QX cash in and we our the quarter exercise X vessels our cash for operating obviously for as quarter, the early LNG payments reflecting liability It liability repayments into $XXX down for Other on held during also $XXX to that from for that call. purchase to an repayments. received service, March already following payment these of notice the previously mentioned on we the

our Moving guidance. to XXXX now

results. expected stronger as XXXX assumed. be on you XXXX heard a of As our evolving in is than our outlook performance now Eli, better than previously is result, financial our for from the and market remainder to Based the XXXX

generate year billion and and $X and EBITDA XXXX adjusted between We are full EBIT our expect and $X.XX between million. $XXX now in billion raising to adjusted guidance $X.XX

the spot the we incorporated seeing is guidance March. into rate rate as incorporated provided we we driven improved Our into current This, guidance assumptions primarily turn, guidance to rates. compared to strength higher in back assumptions freight in the contributed by our are in freight

and the It season to remainder cost out. our the volume I'd like Before how plays contract of briefly it the into the for touching outlook assumptions, bunker on year. plays discuss and

represent spot So, to We remain given May split XX% volume roughly expectation which between Transpacific in for our relatively Transpacific for the We our spot environment. Transpacific on into revisit strong XX% customers new went us our as our vessels outperform volume. for to high the of the annual help ahead, trade of rates, commercial proposition expected year will achieve will only contract which that growth approach and chose effect X, contract, the on this exposure objectives contract XX%, LNG will volume that average the XX prevailing rates. approximately events the believe were likely year's rate spot rate leveraging Transpacific better the than next slightly months our operating value trade last while our

operating the our volume growth we and the outpace provided Our year slightly to we volume upsize hand, as as in assumptions fleet we to compared continue assumptions are increase expect capacity. unchanged, our the XXXX for our higher market growth March. guidance Barter to on and other this guidance underlying remain for costs,

beyond has directly November of see in these the been Europe, to impacted so by the demonstrated on to external our the voyage extends Events ships weeks market supply-demand has Red rates Market of spot the our caused and The global industry, diversions. around equilibrium. recent the far. This remains supply-demand strength to some namely volatile concerns which bringing the Cape our North one to trains, data with Red Sea can Good Moving have significant discussion certain significant nature underlying the in industry. capacity, the absorbing graph security most to to oversupply, balance points Sea XXXX our in as extended and you of balance Yet commentary left. since has evolution of on redivert XXXX the for Hope. a Coast, were certain durations to extent U.S. East a the carriers Mediterranean, the the

rotations As East you December the initial Coast, of was wave see in to of the in now which as spot we the hikes mid-January can extended we from the second But until with U.S. saw improvement impact rates we earlier, see, in a spot constraints, with a mentioned the when rate SCFI is trades. QX improvement rates, a for Asia indications rates in Latin widespread recent Oceania. We coupled and of CTS demand. This for Africa, of equipment including is strength to show start trades, more data additional improved attributable XXXX also healthy freight to rates shows over regional here year. America normalized. spilling

the which is XXXX As half QX mentioned, QX in to already suggests and may last similar compared This QX XXXX second destocking global have the volume ended. and that volume of tracking to cycle, XXXX. X% in for QX XXXX started up year

the the the could it shift season, this see from the journey destination to it early ocean and rates. cycle is container questions. from in right, factory if time picked it of translate to continue to can Or to peak the into the that the the is sustainable on recent uptick OTI note, The would and However, in the Therefore, peak holiday season a or a Thank the suggests measures freight chain. time you this and leave indicator. side signaling is increase demand a timeliness call supply This the in And remains in is of we beginning have the current prolonged the increase available global it on that up cation of its whether seen to demand. restocking a improvement cheaper port. some fact only increase be stress simply demand airing ordering open ensure for the you. on in in timing support season will cargo they for more set

Operator

will session. now question-and-answer begin Instructions]. We the [Operator

the Your comes from from first question today Jefferies. of Omar line Nokta

Omar Nokta

characterize Just a were saw at And wanted clearly, what now are as to little sudden stroke year? broad just you gradually the it building taken saw first the take shortage what's maybe has it something just now place? your of multiple since I to demand? more- a seeing geographies rates. a on perspective transpacific we've it of earlier bit in ask, just due up And that it's one, Or behind XX, X seems it's is from what we And the this and been a me, in the higher really equipment shortage Is this? Asia, mentioned just beginning year this beginning highlighting, like Slide questions that to the the than occurrence? much guess for equipment. got of would And this or off. not that's year.How Europe You lens, the market's you dynamic Xavier. and your caused we supply-driven is

Eliyahu Glickman

We see both side demand supply effect side effect. and

the the Hope ], XX% weekly days [ we Kamal keep a vessels service. crisis tresses [ for more Bab-el-Mandeb, mean our as of result Cape much supply order the more to in many weekly through Otis As Good ] Africa, longer, and about keep side, services, the to going of

to the And Coast Coast of we West and America. from America. East Mexico to high over the coming we India, Coast that, it spend it As Asia as U.S. the capacity, I feel Asia the We side to keep said, see and Asia containers. crisis advance, because we from Oceania. shortage to On than both West West ready beginning Coast. this last we ], Asia this the high the top in industry, to to of Asia Central in And side, compared of we but it service of to only Asia more there on affects is the Asia demand we the full we plan Mediterranean the Asia because rates supply U.S., are South South serve order U.S. all the America, Otis to of to few is the We high in of this time need in and it services High to more early from from that, demand the the Coast the said, or in see , seen [ supply to the We expected. see see not container, the there is way. and U.S. and side. time mainly We effect Africa, or in side. we weeks West demand the

U.S. of high see lower unemployment question. We inflation. demand these In case. did speaking low see level. see low So, a the We very real X not the low because unemployment this employees, let's the for say, and lower market. see In look effect past, high a past and inflation. interesting very we unemployment, the historical is about We bring inflation together

companies in to inventory. people, know don't Christmas for Here, more to trying we spend. of and season, said, I high because inflation see them employees have if of pay and consumer We the the the holidays early demand coming, both U.S. demand really the as to low is more the unemployment attract money because salaries low early this and or Thanksgiving the really this probably

companies after remember, the the covered, inventory As U.S. that. orders side was you the because reduce in the the level of high and on

the what real in the today, U.S. As and in if of inventories of world we The And this the because in see we the low that, demand. understand, side. high us Xavier, this season stay if is what discussed. until you demand holiday of because demand short to or going I season add. would high like after is the a to with question

Xavier Destriau

let see demand I shortage as Omar, also no. question, support me the unless it No, guess And uptick But rate further debt clearly, we U.S., the environment. doesn't, know. vessel in at equipment your providing is now the addresses shortage. the which the Eli that triggered mentioned, in to

Omar Nokta

of maybe capacity. sense. on perhaps the the focused I carriers ZIM's a vessel Makes And a ships their back been in to as returning to follow-up a jump shortage there's on second part is ships mean to charter. in owners. on ocean appetite dynamic big secure We've that other question, seen

highlighted returning some changed do at look all those? in of the You year that Has thought with your given and all dynamics? do What's retain change 'XX. that you your roll off XX about to you them? plan XX this think market for remains in Or the

Xavier Destriau

de double significant I say, taking compared our all significantly. delivering increase we we just as for Okay. lines, digit of operating that with was tonnage what be XXXX build we back 'XX. ships we increase as the at unlike shipping already XX our first, at would the by we Reminding in by all in of just up and renewal, delivery far a end XXXX XXXX.If we to and XXXX, the we our facto would by it 'XX, came all capacity other increase more will of that operating simply that through operated is meaningfully or to end we new the capacity that the are and our expected it we're what than taking had look ordered ordered expected vessels tonnage concerned, end compare of

large, speak think as long-term view not has today, or we a by and our view midterm I changed.

are renewal end to are awaiting for for the basis, up the ships vessels we and But occasion, XX make I now at in always might the between some or redelivering unchanged. we every a that the year. to of On short room and we a So, by we order still ship. renew remains large, come that case-by-case the of single reassess whether and the reassess want we period, keep for objective strategy, think, and the will

Omar Nokta

total leases how this over much will X quarter And and me, year. you the be that should those that due Got spent $XXX roughly math? million discussed upfront And quarters? bit quarter, or I Seaspan next for the million for you it. we a final slides, the, in one expect in of the the there's say, payments Is the made bridge $XXX recall, your if this maybe in cash during next in

Xavier Destriau

more the should have with or give. less you right Yes, clarification I numbers one maybe

payment so XX,XXX million statement at incurred the We ships the ships. TEU buildings. in So, took cash for $XXX delivery Xst of X down delivery of of for full new XXXX, of In and overall first so million those we total expectation X the December, X,XXX looking is going is $XX XXst quarter, the QX. be until payment TEU of all of yes, up January from the to an or as flow

as XXX XX,XXX ]. million. the that million X X,XXX vessels, capacity in right acquired XXX X well [ on and And that's the x the the had then XX% we we So we large That's QX. we X that X as plus option TEU exercised the acquire $XXX to paid

is this and vessels. $XXX quarter the million both option payment $XXX on of the down million So, combination X the of the million $XXX exercising

Omar Nokta

it. Got Okay.

So, I rest split $XXX of would year. million evenly for just assume, the the is, remaining the

Xavier Destriau

yes. or Give take

Operator

Your Muneeba Bank line Kayani from next question of of comes from America. the

Muneeba Kayani

just So the of firstly, I guidance EBITDA it. understand your phasing to and wanted

could that be than the other of from quarter. As EBITDA better we've liners first heard the some XQ

then the in is you're firstly, far profitability imply case, fourth quarter? quarter guess what third given you've the would fairly and in expectation seen So that's low quarter. And resuming that that your second I so if the

you So about year? phasing can please thought how us help this you the understand

Eliyahu Glickman

begin. will will follow. I Xavier Yes.

positive. are First, we we in momentum. very said, we positive And are as

As we the see to said, 'XX forecast than today. 'XX be going better results results are of as we

tried quarter, question to not keep but the are for for quarters. your for go results, about quarterly we year, As speaking to to for we guidance the not the

in You can understand [ and stronger to the the be are the ] take is will going that the the trying as we to and And side give cautious ] we because to be said we past, supply going and Otis that to the ended. to in credit with crisis conclusion when to effect. and be what And it in don't is second to know expect that than we Otis yet and half first advance understand be the -- [ is order believe you the be half. this conservative, we know don't

first half 'XX. are said to what be half as in results to 'XX as is we trying are of be second We conservative the going stronger and for before, to can I strong see going today, result the be and

Xavier Destriau

a has that events over. nobody to add how clear the a the that market also end unfold indeed geopolitical day, just the will and that a event the will going very the are I'm everybody lot sure that control of I situation of result there as coming uptick predict current forecast of in at understands, in are the the difficult to quarters and what's potentially drive happen

at to industry, supply-demand we the just just fundamental initially our fundamental the industry, Eli of precisely the So the is for are build we a in towards that, beginning year be delivered the than vessel around is just disruptions there what is a clearly, now. said, the in if that anticipated. situation what we the leave But very is threat East-West of I earnings lot of we to can get of the at this as overcapacity we terms whereby size that at talked expected if are better look much second half and a stage year trade But say is look our still a second, into that about dynamics mean we strong aside generation. new the tonnage dynamic we if the are of us. still performer today of designed that of

supply enough cautious. good a extra think, why, it So comes more And little the first. XXXX be be, risk is positive and to feel I the half that likely is the we to that that we demand bit good whether be think, is, absorb scenario is need signs it today today, the a demand, weaker bit there. still there Hence when of a second where will to than I might that capacity a

Muneeba Kayani

understand XQ just you've totally seen we've and and And XQ? spot given is be it seen XQ so assume and the trade could in capital I receivables, rates your looking the far that. than what that fair to at working higher

Xavier Destriau

It could.

Muneeba Kayani

previous lease And another on, payments. around up just I the from following ask then, if question may questions

CapEx for next in you terms payments -- lease cash what remind us this of could can the and overall and for year, just please? So, XXXX that and other explanation the year outflows just XXXX, be

Xavier Destriau

be that more for pay said, we secured payments, lease always that us, indeed, is of secured to because could the to we charter we [indiscernible] terms in XXXX the and to year we than today were extent. during expensive that challenging going be So a that some one mostly continue are the

have the clear we we've so, that quite like view. was, which no redelivering by XXXX, that front. ships And are in no XXXX, here. way, build we've and on those we heavy the for ones ordered variable debate, purpose, bringing no the just expensive is There new a is that more question, ordered that But as for

rates be We prevailing foreseeable was those we're that upon the have again, at from shipyards, agreed for build, ship, ordered ship in future, as was the newbuild a new during fixed so the price time the market the decorrelated what the the completely to going days. which, we paying per priced charter

TEU. are charter go back bring if reasonable more to a we that going So, to per payment operated far down to we

in are CapEx, When the XXXX, as charter we payments CapEx, unless terms related. you of don't at anticipate vessel So we down that's payment. in to CapEx consider of any for those of that the delivery making comes ship the today, it

cash flow rentals. to Just a clear, of in It it is not. our statement, prepayment be is

lease line. in the liability So, repayment it goes

and said I make continue in a relate that million about on of bit we talked to taken bit that are And the equipment market order in of cash little our shortages a resulted delivery XXXX from we to We what we maybe new ships. our equipment. payment still have change to us to having the $XXX invest equipment on think may current sure that And we anticipate that previously short requirement customers' As more not we the just is dynamics. to those want meet expectations.

new now that bit and XX-foot commodity a invest front talk about right cubes might we high the we So, which on boxes, bring little when dry in mostly equipment. hot are

Muneeba Kayani

of But Board the do to dividend, in think understand if what ratio. you the review subject of I and And oversupply if I comments threat about around was it on comfortable remember made I think the for the please. has kind paying with third correctly, XQ? Board question quarterly the your dividend industry. ask dividends, I the payout given How a may

Xavier Destriau

unless policy, outlook. at I us dear And to a to dividend you're reasons company Board Look, in, from law I question, policy right forward. think we intend satisfy test several and the From that criteria perspective, see as this the going on meet in a to for policy, adhering satisfy. at have I this a risk And in good are the this result, did and felt [indiscernible]. we agreeing we putting we not we that corporate Israel, there front, policy. deviate confident looking ahead Keep and the by in we felt mean, do have which going dividend What Board distribution. our to were terms to looking dividend of that dividend to comfortable

Operator

Sivakumar Sathish Your from question of next the from Citigroup. comes line

Sathish Sivakumar

X here. questions got I've

the shortages first on So, shortages. slash box equipment or

May? impairment depressed you're is all it rates that unwind? go longer, contract liabilities on on last and in? If contracted, should the Any to will exit this for how given or a in this? an on would on you you would March you read starting is seeing recent only helpful.And be going provision now your the your be and versus took backhaul rate versus Or like are it rates lease XX% freight how rates, or mainly helpful. And color the [indiscernible] work? the coming had based contract seeing rates, it what the about does Would on which the have you rebound done just year, your rates for that on in in Or at then then That off And QX, May? could be are in see think trade that? being just April like QX, Is impairment we any you're [indiscernible]. that lines color of you in you

Xavier Destriau

your for We the the cargo constraints the time to or be able question, equipment to the it bring to clearly Okay. on comes us equipment pressure first position On Asia when U.S. see shortages. rising get to in to

long example, elsewhere in And of destination So, for where need for for equipment which have trade. position mean, is and all to equipment, most place to And Asia of possible. origin we as to place a our to add perspective, bit as think on, acquiring we we earlier to vessel little why from doesn't I also and it maybe equipment, need operating operate our more also also but come by fleet a this The equipment. surprise, need and our additional got way de a Eli the potentially timely the the we due it's Asia intention. that, mentioned we by more that Ningbo is the is shortage [ will I envisage significant the say as ] we way, I we a sure a capacity U.S. because tonnage. U.S. us, increasing increase prepared in mentioned as, from the as But it's the as that really facto trade, when to for make more which of

still pressure. equipment monitor a Asia, some see we need in closely. more here, China, shortage mostly, this to But That many very of specifically. we is So availability

think then be of company, term to it's us is then The discounting a cost assessment side. to and could the those we then But the exercise is the and the asset long as quarter and which allocated compare of that lease is fair when where of rate, did here, generating forecast. amount. year. looking cash the say, generation not use on again, X number, we which looking large be we what the The flow the future We're for or try in X And come is with years liability it? It come even average second X and we on And that the QX, X ready capital might we at cash to ahead a I X to rationale book long-term accounted that's to side. value a we is our at year I'm for what this our decorrelation so impairment and is that impairment. impairment think, we numbers assets. this last the the question, discounted between on not impairment,

whether an improvement the in a that normal. the us are our is cannot a And to market, we from now every directions, which indicators impairment you consider lead that this or could to to up impairment today, safely we there and timing by that new worsening say ask that way, question change should the both or need analysis. same of are we revisiting ourselves So meaningful is the forecast in and material recent perspective, felt that the quarter, still

a I still, are very think, in in volatile We environment.

some impairment rates. season. for when to directions, And when at But and in if percentage to reassessment back we for write question, in assumptions to point time still much to again, we us, are we pretty that add see ahead us the today the we to that think So, for contract your those contract it to it lastly, refer both the we the into of some look secured relating or either could lead or future view had long-term potential revisit the rate I it. XX% unchanged of would, is next Clearly, years. we again, or a think, to

until spot So, explain, we come from to our we volume rates give talk anticipate will We the out of the of the difference And with XXth on the fact Transpacific Xst come as from think, The that by XX%. very market agree contract managed the April that, that The about us May will to of XXXX, spot. is, volume facto, much tried today. take XXXX. driven objective here from cargo of our that or objective customers. or and expect I we that we XX%, up contract see yes,

meaningfully different not they during from the were are season. We what past

environment we spot income TEU we the first a contract average, we but So, think quarter we higher. 'XX way And meaningfully in for higher, think at market the of on for a 'XX better market happen we or what months, our next will look on on in that felt cargo. per on earn not the if slightly will we average, will the XX that that

Sathish Sivakumar

could. just maybe And it. more, if I Got Okay. one

cost, on traditional put operate liners do in the of voyage Is [ with obviously, additional now this LNG the proportion terms have who you it the land. of you a In disadvantage? higher ] bunker? Does

Xavier Destriau

we is the I to the gradually which bunkering, would LNG of consumption ships both diesel more LNG a it the Today, more vessels those say cost benefit for from opposite. similar traditional ship perspective, and a or switching feel perspective tonne fuel. from quite cheaper transitioning is run per to on and on towards than render us and

vessels LSFO of wanted on know, LNG fuel, we are if So, I dual we them to to. the mean, could decide as you our run all

cost because run to they to ships objective, trajectory. be ESG decarbonization First, is them But LNG even meant pure would of cheaper those objective that a operation perspective to we run and want one LSFO. achieve a on are us on from beyond for an don't reason it that, it's

Operator

line of Barclays. Our question Marco from next Limite

Marco Limite

My is leverage. first question on

debt you state, of to as have you net as So, X.Xx QX. EBITDA

My should Just comfortability wondering question is what's covenants and there forward your on around going leverage of? are think if cost. that of level second we

year. this what for now charters do And question costs renewal [indiscernible] chartering into you come my are disruption. is, some up effect clearly, extent the have that to So taking

a than they my follow-up to And much? CapEx example, by expensive but So of chartering were what on the just ago, months let's side. more are previous for a costs question, couple becoming the, question, and third how say,

vessels are say, how vessels? your these view, fuel standard more in So to, LNG compared power expensive let's

Xavier Destriau

Okay.

the one. a maybe ordered last that with in the we starting So ordered, party middle. via third we Those vessels

those were ordered although with it's charter. vessels long-term So charter for a a commitment, back-to-back us

of and vessel the TEU all owner, we also secured with if the on take ships, X Seaspan TEU Seaspan the them were back-to-back with vessels, XX XX,XXX us, and the with another the then with remaining vessel X,XXX LNG charter a fuel of secured them, So as about was owner.

a take the time, So buildings. did let's example new knew to for XX,XXX TEU ask what would shipyard be we we was And we those ships rate. what closer in $XXX was around maybe you the the of if piece. the back $XXX XXXX, me, of million to average price ships at Today, it million. value was And was what charter those the got a were

ultimately as us. is lessor Seaspan to acting financial the a So,

looked secured ships provided to instance. be a for financial in a those finance lease this is the by obligor at so, charter And we rates that

at that So, not got efficient at we still out we tonnage the see where shipyard today. of -- the a timing the from level what right those price good time very perspective feel that to a we was exact went we secure

is our new to to the to leads are return of tonnage which exposed simple cost to we Today, with older us, vessel far saying question. replacing the room build, to we why charter this not market cost for result owners whatsoever. absolute that's is that charted that via second improve we a more per going friendly company which your confidence made us So TEU is the that and as

period. room not renewing our at that that years don't what quite we like vessels ago, come are we the of a deliver deliver buildings what back, charter we we discussing we is that new the for give up renew. and negotiated do would that the which the that rate for we before coming already owner. X are will would for and the renewal We contract way contrary, paying I make the the be charter because said, we We to all secured be end vessel We

is is we the safely cost to that your question why, concerned, exposure of no far to And market current our this environment. in is there structure terms can say as charter first covenant. clearly, So, leverage as then and

a covenant minimum in container is only covenant any facility, facility. cash a We of financial which facility, our First, EBITDA-related is a financial there one million. financing no small covenant in over have $XXX

obligation So, our we counterparts. financial type leverage don't any or any of covenant have gearing of vis-a-vis or coverage

Marco Limite

Okay. if And could I add one more.

say, the rates contract said a to the Just wondering, expect, just throughout stronger rate on year, have as bit you be compared let's spot to the that you average. on Transpacific

And just of the already you Just steep rates? you cautioned the half second contract Transpacific have a the correction spot possibility guidance. versus anticipating in in rate on that been in the is spot because percentage of wondering the higher whether are therefore,

Xavier Destriau

from in low it's to but we discussed contract I or take let market, a larger perspective a taking you opposed the willing take the not, we consideration the exposure as us our which of amount rate, at when whether to lock is question, think conservative spot us mean, to cargo. we I right discussion a your ended will risk that yes, of guidance, up Look, a the but where we of to risk, significant we to a we the and for took us into judge short be provided are outcome answer

that So, of rates also indeed monitor then situation, not likely the fact might downwards, be we whole scenario obviously, mean, will avenue that front. that the prevail to spot spot factored to that we I in will trend anticipate the the the we mindful But today the date. year. of after quarter see And be quarter. our slope guidance rate the is we take then we a that is the it of have on difficult more the for trend

Operator

Eli session. back turn closing concludes this now to call Glickman, will over I And the our question-and-answer remarks.

Eliyahu Glickman

than at We quarter. the anticipated in transformation renewal profit are and ZIM on market stronger advancing first deliver pleased to a we both fleet saw through capitalizing conditions XXXX, progress

structure fuel Our our improve our of efficient, the newbuild highly to powered it for XX once competitive is continues include with renewal the will cost tandem fleet delivery tonnage, in complete. LNG versus

maintain backed transform guidance. we boost our exceptional are we long-term drive our service, our of improved track light by full profile, customer sustainable As year to we've fleet market increased In 'XX on conditions, network growth.

to agile confident and evolving, and our best forward of generate an we you remains our positive further are we dynamics container the our much conditions customers on positioning in strategic look shipping exceptional While market [indiscernible] with. you. continuing Thank as market implement for differentiated place and to to player have to constantly very in and capitalize serve We immune all near-term strategy value team are shareholders.

Operator

the conference call. concludes This

ZIM Integrated Shipping Services (ZIM) 21 May 242024 Q1 Earnings call transcript