The fall in shipping costs in recent years, which continued in 2016, had a negative impact on the results of Zim Integrated Shipping Services Ltd., led by CEO Rafi Danieli. The average price of transporting a container fell to $902 last year, 20% lower than in 2015, pushing Zim's revenue down 15% to $2.54 billion, despite a 5% increase in the number of containers shipped by the company.
Continued streamlining at the company cut Zim's shipping costs by 14%. At the same time, the company's EBITDA shrank by 75% to $50 million in 2016. The company's operating loss totaled $52 million, compared with a $98 million operating profit in 2015. In the bottom line, the company's net loss totaled $168 million, compared with a $2.3 million net profit in 2015.
Zim improved its results in the fourth quarter, compared with the third quarter, following a 3.2% rise to $915 in average per container shipping prices. Zim's revenue amounted to $653 million, 1.5% more than in the third quarter. At the same time, in comparison with the fourth quarter of 2015, revenue was down 5% and the average per-container shipping price dropped 7.4%. Zim posted a $3 million fourth quarter net profit, compared with a $30 million net loss in the fourth quarter of 2015. Following the decline in its results, Zim had a $104 million equity deficit at the end of 2016.
Controlled by Idan Ofers' Kenon Holdings Ltd (TASE:KEN: NYSE: KEN-WI) with a 32% stake, Zim asked the banks and its creditors for, and received, a postponement of a $115 million payment. This follows two major debt arrangements by the company in recent years: the company rescheduled its debt in 2009, and concluded another arrangement two years ago, in which the company's creditors wrote off 50% of a $3.4 billion debt in exchange for 68% of the company's shares.
Israel Corporation (TASE: ILCO), controlled by Idan Ofer, which completely owned Zim before the debt arrangement, agreed to forego a $238 million debt owed to it by Zim as part of the arrangement, to inject $200 million into Zim, and to provide $60 more in credit and guarantees. The debt arrangement left Israel Corporation with 32% of Zim's shares, which it later transferred to Kenon, split off from Israel Corporation in early 2015.
"The Wall Street Journal" reported in November 2016 that the owners of Zim were searching for a buyer for the company, following the severe slowdown in the global shipping market. The company denied the reports at the time, and Danieli is still saying that Zim will continue to operate as an independent company. "We are still streamlining, and the results are visible in the fourth quarter of 2016," he says.
Published by Globes [online], Israel Business News - www.globes-online.com - on March 5, 2017
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