News / Zim down $1.5bn on Q2 22 and facing overcapacity as new ships arrive

Zim’s extreme first-quarter optimism may not quite have turned to despair, but another quarterly loss and no sign of a peak have left its outlook decidedly more conservative.

Indeed, Q2’s $213m net loss is four times that recorded in the three months to March ($58m), and well off the $1.3bn profit recorded this time last year, but CFO Xavier Destriau remained circumspect.

“As the year has gone on, our view on what we hoped would be a H2 pick-up changed, and we have re-evaluated full-year expectations,” he told The Loadstar.

“The confidence we had has been replaced with conservatism as, without the peak, our hoped-for average freight rate looks unlikely to materialise – and a month ago, we took this profit warning to the market.”

That warning indicated Zim was now expecting full-year ebitda of $1.2bn to $1.6bn, and an ebit loss of between $500m and $100m.

For many, the disappointing result comes as little surprise; but what broker Jeffries said was surprising was the carrier’s revised full-year ebit prediction, given analysts’ projections for a loss of $95m – and others others have suggested a peak may still materialise.

Xavier Destriau

Mr Destriau said: “I hope they’re right and we’re wrong, but I can see something in the idea that, while inventories are high, they’re not necessarily high with what people want.

“For us, the important thing is to acknowledge the state of play as we see it, and that means realising that now is the time we would normally see the beginnings of a peak season. But the signs are not there – of course, I would love it if one did materialise.”

Even with its loss of confidence, Zim does not appear to have slowed its deployment of additional capacity, Mr Destriau said Zim had taken delivery of four 15,000 teu box ships, with three more due. He explained its 10,000 teu vessels would be cascaded onto its Asia-US east coast services and has opened a new route linking the USEC with South America, with “others are under consideration”.

He said: “From a company perspective, we know that with every quarter that passes, our fleet structure improves and this is comforting, but it will take more than one quarter.

“We see the risk in 2024 remains one of overcapacity, and the number of new deliveries next year is a very high number. I think we need to see more scrapping, as there are a number of vessels we would have expected to have seen scrapped that, so far, haven’t been.”