Zim Integrated Shipping Services Ltd., a subsidiary of Israel Corporation (TASE: ILCO), today reported poor results for the third quarter. The number of shipping containers it transported worldwide rose 7.1%, but the average price per container fell to $887 in the third quarter, down 20.8%, compared with the corresponding quarter in 2015.
Zim's revenue plummeted 14% to $644 million in the third quarter, and its operating loss totaled $7.2 million, compared with a $34.4 million operating profit in the third quarter last year. The company posted a $38.7 million net loss in the quarter, compared with an $11 million net profit in the third quarter of 2015.
Zim's revenue in the first nine months of 2016 slid 17.4% to $1.9 billion, and its operating loss in that period was $78 million, compared with a $116 million operating profit in the corresponding period last year. The company posted a $171 million net loss, compared with a $32 million net profit in the corresponding period in 2016.
Summing up the company's reports, Zim CEO Rafi Danieli said, "Our strategy of being a global niche company with a focus on particular markets will help us get through the crisis and plan ahead for future growth."
Zim's debt reached $1.8 billion at the end of the third quarter, and the company had negative equity of $103 million, compared with positive equity of $75 million at the end of 2015. Despite Zim's poor results, there is light at the end of the tunnel for the company. Since the beginning of the fourth quarter, cargo transportation fees have soared 37% to an average of $1,204 per shipping container. Cargo transportation fees are extremely volatile, and can rise and fall very steeply. At their current level, however, Zim is likely to return make a profit in the current quarter or the next one.
Zim has been through two major debt arrangements in recent years, most recently two years ago, in which its creditors wrote off half of the company's $3.4 billion debt. In the settlement, the banks, bondholders, and owners of the ships leased by the company agreed to forego $1.7 billion in debt in exchange for an allocation of 68% of Zim's shares.
At the beginning of November, "The Wall Street Journal" reported that Zim, or at least the main part of its business, were up for sale, due to the difficulties resulting from the slowdown in the global shipping market. A Zim spokesman denied the report, saying, "Zim rejects the rumors that it plans to sell its global shipping business. We have been global players for several decades, and have no plans to halt the services we provide to the company's customers throughout the world."
Published by Globes [online], Israel business news - www.globes-online.com - on December 1, 2016
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