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NEW YORK – ZIM Integrated Shipping Services Ltd. (NYSE:ZIM) today saw a sharp drop in its share price, following the release of its third-quarter earnings report that revealed significant losses and a pessimistic outlook for the rest of the year. anus. Shares of the shipping company fell about 10% in premarket trading after announcing an unexpected net loss of $2.3 billion for the quarter, a sharp turnaround from net income of $1.17 billion reported in the same period last year.
The disappointing performance was largely attributed to a non-cash impairment loss of $2.06 billion, with CEO Eli Glickman citing weak demand and falling freight rates as contributing factors. Despite a slight increase in transported volume, reaching 867,000 twenty-foot equivalent units (TEU), the average freight rate per TEU plummeted 66% year over year to $1,139.
Third-quarter revenue was also below expectations, coming in at $1.27 billion (a 61% decline from last year) and missing estimates by $20 million. Earnings per share (EPS) were also affected and stood at -$18.90, well below what market analysts had expected.
In response to these challenges, ZIM has revised its guidance for the full year. The company now expects adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of between $900 million and $1.1 billion and projects an adjusted EBIT (earnings before interest and taxes) loss to range between $ 600 million and $400 million.
Glickman acknowledged that ZIM is going through a transition period, which is expected to continue until 2024. As part of its strategy to get through this tough phase, ZIM has implemented cost-saving measures and has made the decision to withhold dividends for the second consecutive quarter . . This suspension aligns with its dividend policy which aims to distribute between 30% and 50% of annual net income to shareholders where applicable.
So far this year, ZIM shares have taken a significant hit, falling approximately 54%, with a 70% drop seen in the last twelve months. This latest financial update highlights the current pressures facing the shipping industry amid fluctuating global demand and market rates.
InvestingPro Insights
Real-time data from InvestingPro provides deeper insight into the current situation of ZIM Integrated Shipping Services Ltd. Despite the sharp drop in share price, ZIM’s market capitalization remains at a substantial 882.4 million of dollars. The company’s P/E ratio stands at a low of 0.68, reflecting the low market price relative to earnings. An important point to highlight is the company’s high return on assets of 11.83%, despite the current challenges, which indicates efficient management of its resources.
InvestingPro’s advice sheds light on some key aspects of ZIM’s performance. The company demonstrates high quality earnings, with free cash flow exceeding net income. This could potentially indicate strong financial health and effective cash management. Additionally, ZIM trades at a low price-to-book multiple, suggesting the stock could be undervalued. However, the company’s revenue has been declining at a rapid pace and analysts anticipate a decline in sales in the current year, in line with the recent quarterly report.
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