Container carrier ZIM reported a net loss of US$530 million last year, 20 percent down on 2012 as the line works on reducing its crippling debt levels.
ZIM recorded an EBITDA of $48 million in 2013 and a positive operating cash flow of $13 million, despite the difficult conditions in the global shipping market and the sharp decrease in freight rates for five consecutive quarters.
In a results story similar to that of the other box carriers, ZIM saw container volumes growing during the year while freight rates fell, eroding profitability.
“According to SCFI index [Shanghai Container Freight Index], the accepted industry freight rates index, the average rate for 2013 in the major trades was significantly reduced compared with 2012,” ZIM said in a statement.
“As an example, in the Asia–North Europe trade the average freight rate declined by about 21 percent, while in the trade to the Mediterranean it declined by about 15 percent during 2013.”
Most of the damage was done in the fourth quarter, where ZIM posted a net loss of $282million.
The company is in the middle of a restructuring process that the ZIM statement said would, once completed, “immediately improve the company’s results and dramatically improve its financial state”.
In January the signed a term sheet with a majority of its debtors, continuing to make progress towards the completion of the financial arrangement.
“The new financial arrangement will significantly reduce the company’s debt to a level of $1-1.5 billion and improve its expenses’ structure, mainly through reduced interest payments and vessel leasing costs.”
ZIM is in advanced stages of negotiations with the Israeli government regarding the cancellation of the state’s “golden share”, while maintaining Israel’s interests in a way accepted by the Ministry of Defense. The line said this change would “ease the completion of the financial arrangement, enable cooperation with other carriers and facilitate raising capital”.
The annual operational loss amounted to $191 million, compared with an operational loss of $206 million in the previous year, an improvement of $15 million.
The improvement was largely achieved through the implementation of technological innovations that resulted in reduced fuel consumption and fuel procurement at optimal prices, all as part of the comprehensive transformation and efficiency process the company has been conducting over the last three years.
These steps significantly compensated for the sharp reduction in freight rates.
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