ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) is an Israel-based asset-light container liner shipping company. It provides services such as land transportation and logistical services, along with specialized shipping solutions globally.
Recording gains of 83.92% over the past year, ZIM succeeded in the execution of its global-niche strategy and pioneered digital seaborne transportation. With the launch of numerous lines, the company commanded a strong position in the market amid macroeconomic issues including rising inflation and supply-demand imbalance.
In the recent earnings press release, management commented, “Since the beginning of 2022, we have announced attractive chartering transactions for 17 newbuild vessels, securing modern and efficient tonnage particularly well-suited to serve on our expanded network of expedited services. Importantly, we will maintain flexibility to adjust our fleet size based on market conditions and be positioned at the forefront of carbon intensity reduction among global liners.”
ZIM reported better-than-expected first-quarter 2022 results, surpassing both earnings and revenue expectations. It also updated full-year guidance driven by the highest-ever quarterly revenues, net income, and adjusted EBITDA.
Nevertheless, shares of the transportation service firm declined 5.9% at Wednesday’s close.
Results in Detail
ZIM reported earnings of $14.19 per share, surpassing the consensus estimate of $12.81. The company recorded earnings of $5.13 per share in the same quarter last year.
In other positive news, a high net income of $1.7 billion was recorded, up 190% year-over-year. Also, total revenue of $3.72 billion grew 113% year-over-year and beat analysts’ expectations of $3.49 billion on improved freight rates and elevated carried cargo volume.
Adjusted EBITDA for the quarter came in at $2.5 billion, up 209%, while operating income grew 228% to $2.2 billion.
The quarterly carried volume was 859,000 TEUs (twenty equipment units), increasing 5% and surpassing the industry average. Meanwhile, the average freight rate per TEU stood at $3,848, up 100%.
As of March 31, 2022, ZIM’s total cash position stood at $5.1 billion. Meanwhile, capital expenditures were $183 million in the first quarter, up from $133 million in the same quarter last year.
Outlook
In response to encouraging results, ZIM CEO Eli Glickman commented, “Our strong results to date, combined with the 2022 long-term contracts secured at rates significantly higher than those in 2021, have boosted our confidence in our 2022 results and our ability to achieve superior profitability. Based on these, we are increasing our full-year 2022 guidance, and now expect to generate Adjusted EBITDA between $7.8 billion and $8.2 billion and Adjusted EBIT between $6.3 billion and $6.7 billion.”
Wall Street’s Take
Overall, the stock has a Hold consensus rating based on one Buy, one Hold, and one Sell. The average ZIM price target of $73.93 implies 20.6% upside potential.
Bloggers Weigh In
According to TipRanks’ Smart Score system, ZIM gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.
Bottom-Line
The company appears to be well-positioned for long-term success, based on its reduced cost structure and promising future prospects.
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