The Maritime Transportation Corporation Zim has completed an exceptional year, with the biggest net profit ever recorded by an Israeli company – $ 4.64 billion, or nine times the profit forecast for 2020. Simultaneously, Zim announced that nearly a quarter of its shares are held by a firm canon of the Ofer era, and that it will pay an unusual dividend of $ 2.04 billion, which is 36% higher than the value at which the company was issued on Wall Street last year.
Since Zim went public at a valuation of $ 2.6 billion, it has distributed a total of $ 2.6 billion in dividends. ZIM, which is led by Eli Glickman, was listed on the New York Stock Exchange in January 2021, and its stock has since risen by 371 percent, valuing the firm at $ 8.4 billion.
Zim benefits from high demand for maritime transport as well as supply chain issues that occurred following the corona plague outbreak in 2020 and make it harder to service the rising demand. As a result, shipping rates are increasing, and ZIM is one of the companies that is benefiting from the trend. The corporation underlines that its success is not solely attributable to uncontrollable external causes, and that its growth rates are higher than those of its market competitors.
In 2021, the corporation will have sent over 3.5 million containers, a 22.5 percent increase. On an annual basis, the average freight rate increased by 227 percent to $ 2,786 per container, up from $ 3,630 per container in the fourth quarter.
Revenue increases by a factor of ten, but net profit increases by a factor of ten.
According to Zim’s reports, income increased by triple digits last year, reaching $ 10.7 billion, up 169 percent from 2020. The fourth quarter of 2021 alone brought in $ 3.47 billion, compared to $ 4 billion for the entire year of 2020.
The fourth quarter net income was over $ 1.7 billion, compared to a profit of $ 518 million for the entire year of 2020. ZIM beat analysts’ expectations by earning $ 14.17 per share for the quarter, compared to $ 13.2 predicted by analysts.
Adjusted EBITDA (profit before interest, taxes, depreciation, and amortization) was $ 2.36 billion in the fourth quarter and $ 6.6 billion for the whole year, exceeding the company’s expectation and exceeding EBITDA of over $ 1 billion in 2020. On an annual basis, the EBITDA rate from revenue was 61 percent, compared to only 26 percent the prior year. ZIM’s existing operations generated about $ 6 billion in 2021, nearly seven times as much as they did in 2020.
“Industry leadership isn’t only a function of market forces.”
“2021 has been a fantastic year,” remarked CEO Eli Glickman. I’m delighted to state that we dominate the container shipping sector in every operational statistic – and this isn’t due to market conditions alone. To succeed and achieve optimum outcomes, we use and deploy a wide range of digital instruments. True, world container prices have a considerable impact on our results, but we are outperforming the competition: “This year, we grew by 23% in terms of the number of containers we transported, much above the industry average of 7%.”
“We deliver to our shareholders a very high dividend, of 50 percent of the net profit, and coupled with the special dividend we issued in 2021, we come to a distribution of $ 2.6 billion, which is close to 55 percent of earnings – very big figures,” he added of Zim’s large dividend.
“Zim was released about a year ago, and what we’ve been able to accomplish since then has been nothing short of a miracle.” Because today’s Zim is significantly stronger, we paid a dividend that is 50% more than the company’s value on the day it was issued. We raised a total of $ 225 million and have already distributed more than ten times that amount.”
“One of our major accomplishments,” Glickman believes, “is stock market scheduling.” We could not have planned it any better, as if we knew exactly what would happen next. In the year 2021, we were the second most successful IPO in the United States. The next step is to keep the momentum going. ”
“The demand side is the issue.” The bottleneck lies in the ports of the United States.”
What impact does the Ukraine conflict have on you?
“The outcomes of ZIM will not be affected much.” “We have also stopped operating in the port of Vladivostok in eastern Russia.” “We have also halted working in the port of Vladivostok in eastern Russia. We do not take a side in this war. Of course, we have our hearts on what is happening in Ukraine, but the impact on business is modest.” There is still some residual business there relating to the halt of activity, and there are workers, but we do not receive any more orders from Russia in principle.”
“When do you believe things in the transportation field will revert to normal proportions?”
The issue is not one of supply, but rather one of demand. Shipping companies have considerably increased the number of ships and containers serving the United States, which is the primary cause of the crisis. Just at the port of Los Angeles, there are 100 ships waiting; the bottleneck is in US ports. As a result, adding more containers and ships will not fix the issue. If we see a large decline in US consumption, which I do not expect, the remedy might be on the demand side. According to our research, inventories are still at a low level. “At the same time, we are in the midst of long-term contract discussions; prices have risen dramatically, and huge customers have signed with us this year – the level of demand is really high, and the location, not the price, determines.”
Revenue in 2022 will be comparable to that of 2021, but EBITDA is expected to rise to $ 7.1-7.5 billion. The cause, according to Glickman, is a shift in accounting standards involving ship charter agreements. “We want to be conservative, so we’re predicting results comparable to 2021; if we can keep that up, it’ll be great,” he says. “The shipping business has always been turbulent,” he continued, “and when we went public, many people raised an eyebrow.” This would not have been possible without the backing of the board of directors and shareholders. Now it’s up to us to display the outcomes.”
“A lot of the moves that are happening here are deliberate moves, not just external factors,” said Chairman of the Board Yair Seroussi. There is a high level of operational discipline and profitability in comparison to competitors. Although Zim is not one of the larger companies in the area, it is unquestionably a leader in terms of efficiency and expansion speed. Everyone is now profitable, but Zim has made far more spectacular leaps than the others.
Idan Ofer, the company’s largest shareholder (approximately 25%) through Canon, is one of the shareholders listed by Glickman. Even during the difficult debt restructuring time, Ofer stood by the company. According to friends, Ofer saw the immense potential in it and that “Zim is an exceptional company that plays in the sphere of the world’s greatest transportation corporations.”
After a lackluster IPO and massive debt settlements, the company has recovered.
In 1945, ZIM, a shipping firm specializing in the transportation of marine containers, was founded in Israel. The company’s IPO in New York last year occurred only a few years after it executed two massive debt restructurings and after many years of significant losses. In 2009, the corporation repurposed a $ 7 billion debt, and in 2014, it took a massive “haircut” of roughly 50% to a $ 3.4 billion debt.
After serving as CEO of IEC and Deputy CEO of Orange, Glickman joined the firm in July 2017. His investment on the struggling company came off handsomely, thanks to a capital reward of 1.3 percent of Zim’s shares valued at $ 107 million.
By the way, Zim’s IPO on Wall Street got off to a shaky start when the business was forced to settle for a lower price than it had hoped for – $ 15 a share versus $ 16-19 – and it lost over a quarter of its worth on its first trading day.
Later, it began to recover and set new records, citing the lease of new ships, complete repayment of debt to Israeli bondholders, and particularly strong profitability given the state of the shipping market.