Israeli ocean carrier Zim Integrated Shipping Services said its first quarter net loss widened to $163 million from $111 million a year ago and $151 million in the previous quarter because of a “pincer movement” of falling freight rates and rising oil prices.
Cargo volume increased, however, by 3 percent to 570,000 20-foot equivalent units in the three months to March 31 from 555,000 TEUs in the same period in 2011.
Average freight rates, however, slipped to $1,236 per TEU from $1,283 per TEU in the final quarter of 2011, while oil prices jumped to $722 per ton, a 13 percent increase on the average $639 through 2011.
Freight rates began to recover toward the end of the quarter, which, coupled with a steep decline in oil prices in recent weeks, “is expected to have a positive effect on the company’s results for the remainder of the year.”
The company closed the first quarter with negative earnings before interest, tax, depreciation and amortization of $69 million, a 13 percent improvement compared to the final quarter of 2011.
Zim said it successfully completed an adjustment of its financial covenants with all its banks to reflect prevailing market conditions.
This gives the carrier “flexibility and ability to cope with difficult market conditions [and] in light of that, short-term loans have been reclassified as long-term debt.”
Zim said its results reflected the overall situation of the industry and were in line with average operating margins. The 10 ocean carriers that have so far reported first quarter results recorded a combined operating loss of about $2.2 billion.
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