Operating Cash Flow of $102 Million, and a Net Profit of $16 Million
ZIM records in the third quarter of 2012 its best results since Q3-2010, due to a recovery in market conditions, internal efficiency and cost-cutting measures, and a positive seasonal effect. The third quarter of the year is traditionally the strongest quarter, representing the industry’s peak season.
Revenues in the quarter amounted to $1.064 billion – a 9% increase compared with the same period last year. The increased revenues resulted from a 10% rise in the average freight rate compared with the same period last year (from $1,310 per TEU (20ft container) at the comparable quarter to $1,444 per TEU this quarter). Carried TEUs amounted to 617,000, a decrease of 4.5% compared with the comparable period in 2011 and a 2% increase compared with Q2-2012.
The third quarter ended with an operating profit (EBIT) of $80 million compared with an operating loss of $63 million in the same quarter last year – a $143 million improvement, and a positive EBITDA of $125 million – a $140 million improvement compared with the comparable quarter. Compared with the previous quarter, the company reached an improvement of nearly $80 million in operating profit and in EBITDA.
These results form the basis of a strong operating cash flow which amounted to $102 million in Q3, compared with an operating cash flow of $23 million in the same quarter last year and of $24 million in the previous quarter – a nearly $80 million improvement.
At the bottom line the company recorded a net profit to shareholders of $16 million in Q3, an $82 million improvement compared with the same quarter last year in which the company recorded a $66 million loss, and a $63 million improvement compared with the previous quarter in which the company recorded a $47 million loss.
The company's liquidity improved this quarter as well, due to the positive operating cash flow and to refinancing transactions that were completed during the quarter. In accordance, total liquid assets amounted to $182 million at the end of Q3, compared with $159 million at the end of the previous quarter – a $23 million improvement.
Looking ahead, despite the strong results this quarter, the relative recovery in market conditions, and the improvement in overall liquidity, ZIM believes that the industry is still in a vulnerable condition. This is mainly attributable to the increase in available capacity as new-builds continue to enter the market, resulting in supply-demand imbalances and pressure on freight rates, as well as due to the high volatility of oil prices.
In view of that, and due to continued uncertainties in the global economy, market conditions in the fourth quarter of this year and thereafter may be volatile or worse than in the third quarter.
Consequently, ZIM continues to discuss with government officials a possible split of the company. The delay in the government’s decision making may affect the company's competitiveness and may complicate the creation of meaningful co-operations and joint-ventures which are common these days amongst industry players due to the industry's condition. Co-operations and joint ventures of this sort have the potential to significantly improve the company’s cost structure, help cost reduction efforts, and result in improved optimization.