The liner carrier Zim cut its operating loss by 25.3 percent in 2012, while its earnings before interest, tax, depreciation, and amortization improved markedly.
The carrier suffered a loss before interest and taxes (EBIT) of $206 million in 2012, compared to $276 million in 2011. Zim fared even better in terms of adjusted EBIT, where it improved from a loss of $259 million in 2011 to a loss of $67 million in 2012. Much of the difference between EBIT and adjusted EBIT is due to a $133 million penalty for canceling an order for five 13,000-TEU ships, a move that came to light earlier this week
In terms of EBITDA, Zim turned a $107 million profit in 2012, compared to an $82 million loss in 2011. Revenue rose 5 percent year-on-year to $3.9 billion, as container volume held steady at 2.4 million TEUs. Operating cash flow improved to $94 million at the end of 2012, compared with $22 million at the end of 2011.
The line also stressed it was able to reach an agreement with its basket of lenders to delay payment of debt covenants due in 2013 until the end of 2014.
In an interview with American Shipper
, Zim Chief Executive Officer Rafi Danieli said the creditors had gained trust in Zim due to its cost-cutting endeavors. He also said they looked favorably upon the decision to cancel the five-ship order, originally placed in 2007 at the height of the ship-ordering boom and prior to the global economic downturn.
Danieli said the decision to cancel the order was straightforward – similar-sized ships ordered today are roughly 25 percent cheaper and more fuel efficient than the ones it ordered in 2007. The vessels were due to be put into the Asia-Europe trade.
The line said it will provide its banks with a five-year plan by April 30. Danieli said Zim will at some point look to replace the canceled vessels through a more cost-effective order.
“We need those vessels toward the end of 2015 or early 2016, so we’re not under any pressure to order,” he said.
Zim’s outstanding debts total $2.7 billion. The line has relied on cash infusions from shareholders and debt restructuring from its lenders to navigate a difficult period financially, but Danieli said it has won the trust of those lenders.
“Looking ahead, conditions in the sector are still challenging,” Zim said in a statement. “This is mainly attributable to the continuant entrance of newbuilds to the market, which creates a supply surplus and pressures on the freight rates, as well as to the high volatility of oil prices. In view of that and due to continued uncertainties in the global economy, Zim approached its financing partners in order to achieve certain concessions in debt payments due in 2013 as well as an adjustment of the financial standards so as to reflect the current market conditions and the challenges attributable to uncertainties in the global economy and in the shipping industry in particular.” - Eric Johnson