Zim lifts profit and revenue, outlines new strategy
Boosted by a surge in profits and revenue for the second quarter, Zim Israel Navigation Co. has outlined a development strategy based on the provision of additional port, land transport, forwarding, logistics and other services.
At a press conference in Tel Aviv Wednesday, Zim’s management reported a surge in net income to $58.8 million for the second quarter from $3.4 million in the same quarter in 2003. The Israel-based carrier also boosted its revenue 18 percent in the second quarter, to $588.6 million from $499.6 million a year ago.
The big increase in net profit was due partly to capital gains on the sale of two containerships and to a change in tax regulations in Israel. However, a spokesman for Zim said the company’s regular profit from ordinary operations also climbed to $20 million in the second quarter from $3.4 million.
Zim will continue to benefit from the more advantageous tax rules introduced by the Israeli government to promote business.
For the first six months of this year, Zim reported a net profit of $75.8 million, 13 times the $5.7 million profit earned in the equivalent period last year. Revenue for the six-month period was $1.1 billion, up 19 percent on the $960-million reported for the first half of last year. Zim said it increased its container traffic 10 percent in the first half and saw average freight rates increase 9.5 percent.
Profit from ordinary operations in the first six months soared to $60 million from $20.3 million last year.
“The profit increase in the first half of 2004 was affected by an increase in average freight rate per container and number of containers carried … the increase of charter hire expenses … and other factors,” Zim said.
Yoram Sebba, chief executive officer of Zim, announced the establishment of a fully owned company offering shipping-related services such as port, land transport, forwarding, logistics and other services. Zim plans that this new subsidiary, which could be named Zim Ports and Logistics, will contribute up to 25 percent of the company’s income. “Entering shipping-related activities through the new fully owned company will enable Zim to offer services throughout the supply chain,” the company said.
In 2001, the company formed a forwarding and logistics subsidiary called Zim Logistics (China) Ltd. as a first step. The plan now is to expand this type of activity in America, Europe and the rest of Asia, said Dan Nadler, spokesman for Zim in Haifa.
Like other major shipping lines, Zim wants to provide logistics and forwarding services as a complement to oceanborne transport services. The diversification plan will increase Zim’s annual revenues to more than $3.5 billion in five years, the company said. Zim had revenues of $2 billion last year.
Zim also said it intends to order its first post-Panamax containerships. Four ships of 6,350-TEU capacities will be built for Zim’s Asia/North Europe services. This is part of a plan to order 12 containerships at a cost of $820 million. Eight vessels of 4,250 TEUs will also be ordered for Zim’s “Asia Med Pacific Service,” which employs vessels of about 3,000 TEUs.
The 4,250-TEU vessels are planned to go into service in 2006 or 2007 and the 6,350 TEUs ships are due to be deployed in 2008 or 2009.
The company said it is examining several options to finance the new ships, including floating of shares in the stock market at a later stage.
Zim became a 98-percent-owned subsidiary of the Israeli group Israel Corp. in January after the government of Israel sold its 49-percent share in the shipping company.
Sebba said the strategic development plans of the company gained momentum after the privatization of Zim earlier this year.