A number of container ship operators will be scrutinising ZIM Integrated Shipping’s books to see if there are any synergy possibilities with the Israeli carrier, said one financial expert.
It emerged on Friday (22 November) that the New York-listed ZIM’s largest shareholder Kenon Holdings, which is 62% owned by Idan Ofer will sell its remaining 14.8 million shares in the Israel-based carrier, for an expected US$360 million.
Former shipping analyst Mark McVicar told Container News: “The [ZIM] fleet is in good shape and its balance sheet is strong, so there will be three or four lines, maybe Maersk and the Japanese lines, that will look at its books.”
Carriers will be looking for possible synergies, according to McVicar, but this often does not amount to anything more, “most likely outcome is that the shares will go to an institutional placing.”
The carrier reported a third quarter net income of US$1.13 billion last week, up from a net loss of US$2.27 billion Q3 in 2023, while volumes increased 12% to 97,000 TEUs, while the average freight rate per TEU increased 118% to US$2,480/TEU year-on-year.
Eli Glickman, ZIM President & CEO, stated: “We are pleased to share our success with our shareholders and declare a special dividend of US$100 million on top of the regular 30% of quarterly net income dividend payout of US$340 million… Our growing earnings power is reflective of a strong rate environment, but also a testament to our diligent execution, upscaling our capacity and enhancing our cost structure.”
ZIM will take delivery of the last four of 46 newbuildings, including 28 LNG-powered vessels, mainly chartered ships, which will mean that the company “will be operating a fleet that is both well-equipped to meet emissions reduction targets and well suited to the trades in which we operate,” said Glickman, who believes “declining unit costs” means the company is “well positioned to deliver profitable growth over the long term.”
McVicar, who was involved in ZIM’s IPO in January 2021, added that the carrier is in strong position, with its major trades in the Pacific, including its premium service from Southeast Asia to the US East Coast, “which they have made work very well,” as well as its operations on the Asia to Europe trades.
“The carrier has many ships on charter, but many of these charters will be up for renewal next year, so if the market softens it will have the flexibility to shrink the fleet by around 15% over the next couple of years,” added McVicar.
The retired analyst conceded, however, that this year’s strong results for ZIM and other container shipping lines were a result of the Red Sea diversions caused by the conflict in the Middle East, which has absorbed much of the 478 vessels, with a combined capacity of 3.1 million TEUs delivered this year.
