[120612.EN.SEA] Zim Plunges Further Into Negative Territory Despite Q1 Volumes Rising 3pc

ZIM Integrated Shipping Services ended the first quarter of 2012 with a net loss to shareholders of US$163 million, $12 million more than the $151 million loss recorded in the previous quarter.

In the January to March quarter it registered a negative EBITDA of $69 million, a 13 per cent improvement compared to the EBITDA in the last quarter of 2011.

The company attributed its loss making to declining freight rates coupled with higher oil prices and an increase in its accounting (non-cash) financial expenses.

Zim said average freight rates per TEU decreased from $1,283 in the last quarter of 2011 to $1,236 per TEU in the first quarter of 2012, equating to a further 4 per cent decrease, on top of a 5 per cent decrease recorded in 2011. At the same time, oil prices in the market increased in the first quarter to $722 per ton of fuel oil (on average) compared to $639 per ton (on average) in 2011, an increase of nearly 13 per cent.

On the other hand, the Israeli shipping line transported 3 per cent more containers in the first quarter of the year at 570,000 TEU, compared to the same period last year.

In addition, it successfully completed an adjustment of its financial covenants with all its relevant financing banks to "reflect prevailing market conditions." The completion of this adjustment is intended to give the carrier "flexibility and ability to cope with the difficult market conditions," it said. In light of that, short-term loans have been reclassified as long-term debt.

Looking ahead to the remainder of the year, the company highlighted that towards the end of the first quarter the market started to recover in terms of freight rates, with the Shanghai Containerized Freight Index (SCFI) up 50 per cent since the beginning of the year. Furthermore, thereÕs been a recent rash of freight rates announced by leading shipping lines. Simultaneously, a sharp decline in oil prices, recorded in the last few weeks, is expected to lower the company's expenses.

These signs of recovery in the overall market is expected to have a positive effect on the company's results for the remainder of the year.

Source : SN-TR, 07.06.12.