Zim Integrated Shipping Services swung to a net profit of $16 million in the third quarter from a $66 million loss a year earlier and a $47 million deficit in the second quarter, but cautioned that container shipping “is still in a vulnerable condition.”
The Israeli ocean carrier attributed its best quarterly results in two years to a recovery in market conditions, internal efficiency and cost-cutting measures.
Revenue grew 9 percent to $1.1 billion, driven by a 10 percent increase in the average freight rates to $1,444 per 20-foot-equivalent container that outweighed a 4.5 percent decline in traffic to 617,000 TEUs.
Operating profit of $80 million represented a reversal from a $63 million loss in the same quarter in 2011. Earnings before interest, tax, depreciation and amortization totaled $125 million, a $140 million improvement from a year earlier.
Zim, a subsidiary of Israel Corp., warned it faced potential financial difficulties resulting from market volatility, high oil prices and an uncertain global economy. “Therefore should the need arise, (Zim) will approach its financing partners, who have been supportive in the past, to achieve certain concessions or additional flexibility to help the company overcome any difficult period,” it said.
Israel Corp. injected $550 million into Zim as part of a financial restructuring launched in 2009 and pumped in another $150 million this year.
Zim also appealed to the Israeli government, which holds a “golden” share in the carrier, to approve a split of the company into a domestic and an international carrier.
“The delay in the government’s decision making may affect the company’s competitiveness and may complicate the creation of meaningful co-operations and joint ventures which are common these days amongst industry players due to the industry’s condition,” the company said. “Co-operations and joint ventures of this sort have the potential to significantly improve the company’s cost structure, help cost reduction efforts, and result in improved optimization.”