Zim posts fourth quarter profit of $81m
ZIM Integrated Shipping Services, the troubled box line owned by Israel Corp, posted net profit of $81m in the fourth quarter of 2009 and net losses of $332m for the full year. Zim posted net losses of $432m in 2008.
Conditions for Zim improved at the close of a trying second half, with volumes carried reaching 498,000 teu in the fourth quarter in comparison to 455,000 teu in the third quarter. Container carrying prices edged up in the same period, to $1,136 per container compared to $1,027 per container in the third quarter.
But this was not enough to push Zim into economic profits for the fourth quarter. The reported $81m profit comes after a one-time only financial gain of $229m associated with Zim"s painful restructuring, which was vetted by shareholders after a drawn out battle in November last year. The 2009 fourth quarter profit compares to a $199 loss in the year-earlier quarter.
Zim results were seen by analysts as a positive sign for Israel Corp, which reported an annual net profit of $6m for 2009, down from $320m in 2008. Israel Corp, closely held by the Ofer family, owns a major chemicals and oil refinery business in addition to Zim.
?There are some signs of stabilisation, although Zim has not returned to genuine profitability,? said Yoav Burgan, analyst for Leader, an Israeli investment house.
Zim had a boost in revenue in the fourth quarter associated with the mild improvement in business. Revenues rose to $688m in the fourth quarter from $596m in the third. The gains were largely offset by higher bunker prices in the fourth quarter compared to the third.
The one-time financial gain comes from a revaluation of Zim"s debt following its restructuring under International Financial Report Standard rules to account for shifts in fair value on portions of the debt.
?It is an accounting gain with no business value,? said Mr Burgan, who noted that as restructuring plan plays out over time, the financial expense of the debt is likely to increase.
Zim shareholders finally approved a bail-out deal for the box line in a knife-edge vote in November. The deal included an injection of $450m by Israel Corp in to Zim and agreements with financial creditors to whom Zim owes $1.5bn to reschedule repayments of debts over periods of up to 10 years.
Zim, like other box lines, has benefitted since the start of the year from higher volume on the Asia-Europe trades. Zim announced a general rate increase on this trade of $200 per teu in February.