ZIM Integrated Shipping Services Ltd. Q1 FY2025 earnings call

• ZIM had a strong first quarter with double-digit carried volume growth and enhanced profitability, driven by fleet scaling and strong demand. - The Board declared a dividend of $0.74 per share based on Q1 results, adhering to the policy of distributing 30% of quarterly net income. - Adjusted the network in response to changing Transpacific demand and tariff policy, including reversing the suspension of the ZX2 service. - Secured a 12-year charter for 10 11,500 TEU dual-fuel LNG container ships, enhancing commercial agility and ESG goals. - Reduced carbon intensity by 16% in 2024 compared to 2023 and surpassed the 2025 target of a 30% reduction versus the 2021 baseline with a 35% decrease.

In the first quarter of 2025, ZIM generated revenue of $2 billion, with net income of $296 million, representing year-over-year increases of 28% and 222% respectively. Adjusted EBITDA was $779 million with a margin of 39%, and adjusted EBIT was $463 million with a margin of 23%. Carried volume grew by 12% year-over-year. Non-containerized cargo revenues, primarily from car carrier services, totaled $114 million for the quarter. Around two-thirds of ZIM's operated container ship capacity comes from 46 newbuilds received in the last two years, with a total capacity of approximately 774,000 TEUs from 126 container ships.

• Maintained full-year guidance for adjusted EBITDA between $1.6 billion to $2.2 billion and adjusted EBIT between $350 million and $950 million. - Second half is expected to lag the first half. - Contract volume for Transpacific in 2025 is around 30% of expected volume, similar to the prior year. - Assumes lower freight rates in the remainder of 2025 versus Q1, low-single-digit volume growth, and slightly lower bunker costs.

• Uncertainties in global trade and geopolitical issues impacting supply-demand balance. - Red Sea safety concerns preventing resumption of transiting through the canal in the foreseeable future. - Tariff uncertainties and their impact on purchasing and booking decisions, potentially disrupting the supply chain. - Need for further investment in inland and port infrastructures to avoid disruptions.

Q: What are customers' inventory levels and thoughts on early peak season?

A: Customer inventory levels were affected by tariff changes. The recent tariff pause boosted demand, but uncertainty remains post-90 day period. Early peak season potential exists but depends on tariff resolution.

Q: How does ZIM view Red Sea transit?

A: ZIM will not return to Red Sea until safety is certain; concerns about seafarer, vessel, and cargo safety persist.

Q: Why the change in Transpacific contract volume expectation?

A: Tariff uncertainties affected negotiations; new contracts are ~30% of volume, similar to prior year, with customers being wait-and-see.

Q: Port fees on Chinese-built vessels?

A: ZIM has ~half its fleet Chinese-built and is exploring mitigation plans.

Q: Q2 outlook?

A: Volume pickup and rate increase possible, but duration depends on tariff resolution by key dates like August 14th.

Q: Network development and charter duration?

A: Adjusted network in response to demand, with two-thirds of capacity from long-term charters (over 5 years), and third from short-term charters; flexibility in short-term capacity.