Shares of container line shipping services provider ZIM Integrated Shipping (NYSE:ZIM) are tanking in the pre-market session today after it posted lower than anticipated second quarter numbers and skipped announcing a dividend owing to losses during the quarter.
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In Q2, revenue tanked 61.8% year-over-year to $1.31 billion, lagging estimates by about $40 million. At the same time, net loss per share at $1.79 too came in much wider than the Street’s estimates by $0.87. In comparison, the company had posted an EPS of $11.07 in the year-ago quarter.
During the quarter, carried volume came in at 860,000 TEUs with an average freight rate per TEU at $1,193, pointing to a 67% decline over the prior year. The company had a net debt of $1,663 million at the end of the quarter and had a net leverage ratio of 0.5x.
Amid a challenging market scenario, ZIM is taking steps to lower costs, rationalize its existing capacity and expects an improved cost structure into 2024 with the delivery of its new and fuel-efficient tonnage.
The company had a cash pile of $3.2 billion at the end of the quarter but has skipped the quarterly dividend this time around amid its Q2 losses. At the same time, it has reiterated its dividend policy of distributing 30% to 50% of its annual net income.
For the full-year 2023, the company now expects to generate adjusted EBITDA in the range of $1.2 billion to $1.6 billion. Importantly, it expects a lower volume growth and sees weak freight rates persisting into the second half of 2023.
Overall, the Street has a $14.14 consensus price target on ZIM alongside a Moderate Sell consensus rating. Today’s price erosion comes on top of a 73.4% drop in ZIM shares over the past year. Short interest in the stock is now at about 21%.
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