Q4 2023 ZIM Integrated Shipping Services Ltd Earnings Call
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Ladies and gentlemen, thank you for standing by.
He called off your chorus call operator, welcome and thank you for joining the sudden it's Craig so things for Q.
Q4, and full year 2022 earnings conference call.
I hope today's call the presentation, all participants will be in a listen only mode.
The presentation will be followed by question and answer session.
If you would like to ask a question you May press star followed by one on your Touchstone telephone.
The stocky followed by zero for operator assistance.
Now like to turn the conference over to Atlanta holds more than others.
That's our relations. Please go ahead.
Thank you operator, and welcome to Zimmer <unk> fourth quarter and full year 2022 financial results conference call.
Let me on the call today are president and CEO and Sylvia just C. O M. CFO before we begin I would like to remind you that during the course of this call. We will make forward looking statements regarding expectations predictions projections or future events or results, we believe that our expectations and assumptions are we.
Oh.
We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ including materially you're kind of referred to consider the risk factors and cautionary language describing to the documents the company filed with the Securities and Exchange Commission, including our 2022 annual report.
<unk> filed on form 20-F today March 13, 2023, we undertake no obligation to update these forward looking statements at this time I would like to turn the call over to Jim CEO elect Lakeman Ellie.
Thank you Donna.
Welcome everyone.
That's cool.
But number two what it wanted to.
I can do for them.
In terms of you'd be done maybe with others.
We delivered adjusted EBITDA of seven four and 5 billion dollar adjusted EBITDA of $6 1 billion below 14% and 6% higher than 2021 respectively.
Adjusted EBITDA margin reached six 2% and adjusted the smoldering routes reached 49%.
The development of our quarterly results at once if you wanted to change.
Changing market dynamics would be.
Q1, what it wanted to was our best quarter ever.
But to all four of them children a portion of bonuses.
Two of them.
O clock quarterly results.
Blood to cope with.
Q4, 2022 as well.
I'm not picky reflect.
The negative impact of the decline in freight rates.
I'm incredibly well.
With us today, what the new team for the exceptional execution delivering this record result, and need to go through until 'twenty, two guidance, especially considering the evolving market conditions.
Slide four we haven't been able to either for the past two years as we benefit from Highland look up these market conditions, we took important steps.
The best positions in to execute the more normalized market environment and Paul will go through to ensure that really optimizing its performance for the benefit of all show a good and creating sustainable value over the long term.
Most important was that a decision to adopt our vessel charter in strategy.
We secured cost competitive fuel efficient newbuild capacity.
So charter agreements to support our commercial strategy.
This agreement includes vessel Virgin foremost flagship 15000 to U N G U verse.
It doesn't the edge up to U S East coast servers to smaller more versatile well thought Belgium and 7000.
Yes.
Notably.
That's really played smaller vessels with large one oh gosh, you will decline driving improvements to our cost structure swell 2023 and beyond.
Theres really allows them to competitors operate loved wave right market and weaker demand environment and maintain our objective of maintaining positive.
Our chartering strategy also underscore G W.
One theory for 46, Newbuild vessel, we secured our LNG powered making us I mean, it was just really the time of low carbon intensity.
The 15000 to your vessels are that are ideally suited to serve well now go to yours is cause too and we all felt liner to operate LNG vessels on this spring.
This is a significant commercial differentiation, which enable us to reduce the carbon footprint over there and our customers.
Next.
Global Mis strategy and customer centric approach remains the foundation of our commercial strategy.
Our customer relationships.
Everything.
We do it.
We continue to make progress he mentioned customer experience with.
We continuously work to enhance our digital offering.
Got it.
To ensure we maintain the highest service quality, while preserving the personal touch.
We spoke with some special causes.
Value services, we continue to invest in mobile sales to certain stores to support our profitability objectives. We also stand so local.
Present in important markets, such as Australia, New Zealand, Thailand and Vietnam.
How commercial presence today is more diversified as we focus on places where we can establish a competitive position.
We continuously review our services and thrive during a muscle for the benefit of all customers.
With market conditions, but where that those services open new lungs modified operation and suspend lossmaking services there.
Recent example of these changes in crude.
And you bring them along from South America West Coast to yours.
Rich we redeployed vessels.
We obviously deploy and intelligent services.
Most of it probably major quotes in southeast Asia.
The other.
Well it doesn't change.
As you are about the moat that extra discoveries and suspensions. So special of Xactly X O as yet to every express service.
These changes are poor people enjoying approach.
It provides them streamline services to our customers as well as responding swiftly to changing market dynamics.
We also recently established a joint venture.
The largest domestic shipping company in Vietnam high and shipping services.
We have discussed the potential we believe this market towards these joint venture uniquely positions him to serve local importance and explosives.
And more effectively connect local services, we saw international network.
This joint venture will allow us to better serve on the structures shifting from China to Vietnam as well as potentially target the expense income, Bosnia and loves to international trade.
We also identified the cause.
Commercial opportunity.
Every other market.
With strong demand.
Supply.
Duncan and positive market dynamics.
We currently offer like 11 car carriers, whose plans to expand to some extent vessel by immediately.
That means our gross adds are complementary to our core shipping activity.
We continue to explore opportunities in early stage companies, introducing disruptive technologies technology technological technologies.
Shipping and border ecosystem.
Most recently, we participated in the equity and debt financing wrong.
For the company 40 Skus.
Very good.
The platform designed to modernized kohl's border trade financing, but.
But using AI tools potency streamline the credits application forces can also small and medium sized importance and export them faster and cheaper access to working capital financing than traditional financing.
Mentioned.
Institutions.
More than.
Vault tissues represent a unique financing solution that we will very soon.
So to our customer as well.
I'm really really all via our digital rights for the <unk>.
Forward.
The valuable synergies between Shreveport and focuses and we are pleased to be able to offer.
Semi customer.
New and innovative digital star nothing solution designed to assist them to grow their business.
The positive development, which may benefit wave Bill of Lading wonderful early investment is the recent decision by the digital container Shipping Association did you see yesterday. It was established in 2019, but most of the largest chicken company.
The objective of establishing a few standouts.
Oh interesting.
Together.
Founding member represents almost 70% of the global container shipping.
This is this is a S. A member recently announced their commitment to reaching 15 plus.
And the store next bill a lesson, we've seen five year, 100% by 'twenty searching.
As you May recall, the first introduced in the one that's been a blessing to its customer so the wave solution back in 2017 and today either major shipping companies are also we are also offering the wave solution.
Customers we.
Active investors and all our portfolio companies as we leverage our expertise knowhow and the wood and metal to support these companies.
We believe so.
Polio companies all significant potential in the future.
Our goal is to build financial resilience.
Stay focused almost packaging and label Joe coaster, and then chose zoom is best positioned for a more volatile and uncertain Muslim.
We intend to employ our significant cash resources scholarships to support our future profitable growth.
The actions that they ever outline.
Advanced primary objective.
Use those strengths to grow profitably and maximize value for shareholders.
Turning to slide number five.
Despite the current credit environment and challenging macro and industry dynamics, we are confident now strategy and expect positive EBIT.
He'd been in 2022.
As such for the fall is we expect to generate adjusted EBITDA between one point.
BB and below $2.2 billion, and adjusted EBITDA between $100 million to $500 million.
Oh seat for several years.
We will shortly discuss the underlying assumption.
Hi, Vincent town markets environment in greater detail.
Based on our strong full year results and confidence in our strategy.
Our board declared.
Our Q4 dividend.
Walks around the three $769 million, Oh, 6.4 dollars a share.
This brings our total dividend payout on the count of 21 to two points.
One zero pool.
The $1 44 percentage, let's talk that wanted to net income.
Returning substantial capital to shareholders remain a priority as we seek to create long term value I mean, they've been shareholders to directly benefit from our results.
On that note.
I will turn the call over to our.
Oh CFO for his remarks on the financial result, an additional comment on the mosque severe.
Please.
Thank you Randy and again welcome to everyone.
On this slide presents our key financial and operational highlights.
The lease is already mentioned 2022 was a year of exceptional financial performance.
Even with the pace of normalization accelerating during the latter part of the year.
Despite the deteriorating market being generated record revenue of $12 $6 billion in 2022.
And that is to be compared to $10 $7 billion.
And then in 'twenty, one a 17% improvement.
You mean, the euro our average freight rates to you was $3240, 16% higher than in 2021.
We benefited from the innovation freight rate environment for the majority of the year.
Thank you for a refrigerator to you was $2122 42 per cent decline year over year, and 37% decline from the prior quarter.
Oh, I think that's probably the fourth quarter totaled $1 billion compared to $1 7 billion in the fourth quarter of 2021.
Turning to our balance sheet total debt increased by 1 billion dollar since prior year end.
As in recent quarters. This was mainly driven by the increased number of vessels fixtures.
Longer term charter duration as well as higher daily chartering rates.
Regarding office, we currently operate today at Huntington 52 vessels out of which 12 Oclock hour here.
The address amazing duration of our current charter capacity is 27 three months essentially unchanged from November 2022.
I would note that our current fleet include five newbuild vessels.
Four of 12000, Teu capacity and 115000 Teu, which is the first of the series of the 15000 Teu LNG vessels that we ordered in 2021.
We have 22 vessels for charter when you work during the remainder of the year with 76.
For renewal.
2024.
This means that we had a total of 50 50.
58 vessels up for renewal compared to the expected delivery of 41 chartered newbuild vessels during the same time period.
What are you going to the next slide you can see that we delivered strong results over the last two plus years.
And as a result, our net leverage ratio has trended downward at the same time and currently stand at zero as of December 31st 2022.
We ended the year in a net cash position.
Turning to our fourth quarter and full year financial performance.
Fourth quarter net income was $417 million.
Pay up to $1 7 billion in the fourth quarter of last year.
Adjusted EBITDA in the fourth quarter was $973 million compared to $2 4 billion in Q4 2021.
For the full year net income was $4 $63 billion compared to $4 65 billion in 2021, and obviously that'd be that was seven 5 million compared to $6 6 billion in two.
2021.
Lower margins margins sequentially, the second half of 2022 versus the first half as well as Q4 versus Q3 are driven primarily by lower revenue.
Turning to slide nine we carried 823000 teus in the fourth quarter compared to 858000 to use during the same period last year, a decline of 4% compared to the market decline of eight 5%.
And for the full year, we carried sleep, one 4 million Teu.
A 3% decline compared to 2021 slightly better than the market the kind of 4% in that quarter.
So I think the food get together.
Lower volume on Transco, seafood, driven by congestion and lower demand with partially offset by higher volume in all the trade Lane.
Next we present, our cash flow bridge.
We ended 2022 with a total liquidity position of $4 $6 billion.
Important to emphasize that this includes cash and cash equivalents.
Trends in bank deposits in other investment instruments.
For the full year adjusted EBITDA, seven 5 billion converted into $6 $1 billion of cash flow generated from operating activities.
And the other cash flow items included $314 million or net.
Net capital expenditure.
One $7 billion of debt service, mostly lease liabilities.
And dividend distribution of $3 $3 billion.
Moving to our guidance as already mentioned, we expect to generate positive EBITDA in 2023, specifically, we expect to generate in 2023 EBITDA of $1 8 billion to $2 2 billion and EBIT range between probably two.
Two $500 million.
We believe freight rates are close to bottom.
Some improvement in 2023.
Further we also expect our volumes to grow in 2023 as compared to last year.
As we received a newbuild capacity now idle to better optimize offerings.
As a bunker cost, we expect lower rates this year versus last year.
Overall, while we don't give quarterly guidance, we do expect improved results in the second half of 2023 as compared to the first half.
So we are entering these are unpredictable times with a strong balance sheet.
Our significant cash balance of $4 6 billion and zero net leverage.
As such our board of directors declared a dividend to shareholders, which including prior dividend paid on account of 2022 result totals 44% of 2022 and ethical.
We do remain committed to returning capital to shareholders under our current dividend policy of returning to shareholders, 30% to 50% of our annual net income.
Other capital allocation priorities remain intact, we have a commitment of approximately $155 million and $340 million in 'twenty three.
And 24, respectively.
Down payments for Newbuild vessels charted primarily from Seaspan.
Of which we already paid $13 million for the first 15000 Teu ships they leave it to us last month.
We will continue to renew our container fleet.
And we continue to explore inorganic growth through the potential acquisition of regional liner in key markets, such as southeast Asia or Latin America.
The backdrop against we are providing guidance today is the extremely challenging the supply demand imbalance points to oversupply in 'twenty three 'twenty four.
So and as a result congestion in youth sports and elsewhere has any one of them.
Despite lower volumes in recent months in virtual inventory to sales ratio was still below pre pandemic level.
That's come down and various large U S retailers expressed caution.
We expect to get 2023 sales.
These factors among others are causing freight rates to continue siding, though at a slower pace as compared to the fourth of 2022.
Yes, there may be factors on both the supply and demand side that could mitigate the supply demand imbalance.
But that's again that's impacted by slippage.
In fact, we've received indications with respect to some of our chartered newbuild vessels on potential delays.
Copying also remains low but the combination of practically no scrapping for the past two years and increased compliance requirements. In IMO 2023 regulation May also decrease net supply.
On the demand side, we believe that in 2023, we will see a return to a more normal pattern.
This demand is stronger in the second half of the year, especially given the current weak demand.
And on these notes, we will open the call for questions.
Ladies and gentlemen at this time, we will begin the question and answer question.
Anyone who wishes to ask a question.
Star followed by one on the Touchtone telephone if.
If you wish to remove yourself from the question queue. You May press star followed by two.
If you are using speaker equivalent today, please lift the handset before making their selections.
Anyone who has a question May press star followed by one at this time.
One moment for the first question please.
The first question is coming from knocked out Omar from Jefferies.
Please go ahead and ask your question.
Thank you Hey, guys good afternoon.
Nice earnings report today clearly.
Yeah, Hi, Yeah, Yeah definitely earnings coming in stronger than a lot of unexpected.
And I just wanted to ask you know maybe about the if you could expand just a little bit about the that the earnings are surprised perhaps the.
The other revenue line item I guess, the non container a portion of the revenue those were at their highest ever at 442 million, what's behind the upward move there and what can we kind of expect as we move here in the next couple of quarters.
Actually I'll. Thank you Omar for the question.
We are concerned the Q.
Q4, we thought it would not surprise US then there are pretty much in sync with the guidance that we provided the market with back in November but to your question with respect to the contribution of our non containerized income, but we did benefit in the fourth quarter from two strong factors, firstly detention and demurrage.
It's especially relevant on the transpacific trade lanes in the U S, where as cheap quite high we still experienced congestion in Q4.
Although now this has a pretty much a bin Wang itself and second when it comes to our car carrier activity, we've been growing and we continue to grow our presence in the say in this market and it has contributed to also.
If he can impact on our revenue.
Revenue and also on our bottom line and we expect the cochlear activity to continue to contribute positively to our earnings next year in the years to come.
Got it thanks I'll be here and then maybe just kind of big picture clearly from the press release the presentation and in your comments here E. Then you feel very confident despite the soft market, where we're seeing today, which will have positive EBIT, maybe perhaps positive earnings that's a graph for 'twenty three I think.
It was just kind of think about the market as it is today, how would you characterize it.
The things that you mentioned that you expect rates to be at bottom here in the near term and their recovery coming.
What's going on in the market from say from your perspective.
From the demand angle are we seeing an actual substantial drop in demand or is this more of an unwinding of retail inventory and that's where we may not really have a good clear picture of where demand is you feel about inventory unwind completely.
No. That's a good question that there is clearly a lot of uncertainties ahead and that you said that we are confident I would say that we are considering the actions that we took.
In 2021, and 2022 to make sure that we are well prepared to enter into a decent new normal post COVID-19 and so our cost structure is going down in D. C is the one lever we can have the election upon that we've been very active in.
In ensuring that we drive the cost down so that we've done and now when you've got a CEO .
So the demand clearly we've seen if the demand is soft to me throughout the second half of the of the of last year, we've seen it.
Is that is that you've seen that the capacity and has it been the adjusted or was that more and more blank sailings, but as we were implementing more blacks I think the demand was still.
Soft and even more so we believe that at some point he said destocking effect will end.
And the retailers need to have to come back in and replenish their inventory and its why we are going to be optimistic when it comes to the statement that we are making we think that said the market is close to reaching the bottom before.
It starts to come back and and as a result, we expect that you have a positive effect on the overall figures.
Thank you. Thanks, Thanks for that color and maybe just one final one just about the.
The contracting Ah Ah that's hopefully a potentially underway now how are things developing here for 2023 contracting season, you know clearly there's been a big disconnect between contract rates, historically and where spot rates are.
What's going on in that market and how are you preparing for that.
Yes, clearly the market today, when we look at where the sports country. He's on the main transpacific trade Lane.
A kind of a.
Pushes the shippers throughout for a significant reduction compared to compared to last year, and we very well understand that so yeah. The one thing I would say is that the company is that it has the engaged with most of our key customers with whom we are we like to enter into a contra.
Back to a contract settlement both from a quantity perspective and from a rate perspective, well first what we are hearing today from our customer base is that they are very pleased with them and then we hear a lot of positives there.
Feedback and comment on the fact that the very fact that we are the first line or to deploy in LNG as service on the Asia to the U S East coast and that resonates very strongly.
To Oh.
Our customer base.
We do hope that it really translates into the final discussions on the rates to levels, where we would do both our shippers and and and ourselves.
We are clearly you haven't set ourselves there are you.
You know a limiter in terms of where we are not willing to go in terms of in terms of floor for now the discussions are ongoing it's still too early to say what will be the final outcome of all of those decisions, but clearly we feel that from a commercial positioning perspective, the name and the brand of the Dean there isn't it.
Hi.
In the eyes of our customers in the U S.
And we we still are looking to 50 50 and the ratio that we've been.
Giving back over the past few years, a 50% contract goggle and 50% spot is is still pretty much where we would like to two or two and but again, we will see where we end the win that we find that each of the discussion with each of our customers.
And if the rates are not satisfactory to ourselves, we might revisit that the percentage allocation and and agreed to two which goes out of most of the swap market, we think that the second half to.
To be better than the first.
Okay, and then and just for clarity. The 50 50 is just on the Trans Pacific.
Correct. This is really the trade where we have that.
And if you can amount of our volume that is being contracted and we feel that on the other trade lanes are mainly in the Asia Med. We also have a contract discussion with customers, but those are more quarterly as opposed to a yearly and and they in terms of the in terms of content I would say, it's 25% of the trip so congrats.
The 50% of the transpacific.
Great. Thank you I'll turn it over.
Yeah.
The next question is coming from Bland.
From Jpmorgan. Please go ahead.
Hum.
I have two questions. Please the first one is on the charters you mentioned the sort of maturity profile.
Your current plan to let them run to maturity almost sort of degree timescale or are there any options to either.
Accelerate or delay yeah, how are you thinking about that.
And the second question is you mentioned slippage.
Order book in the presentation, we've heard that from elsewhere as well.
Do you think it's possible that the slippage.
B class a material amount of the orders or deliveries planned for 'twenty three 'twenty four or are we talking about sort of small bits around the edges.
Hi, there good morning.
I'm going to U S and yes. The first question in terms of the charter clearly we need to differentiate you know I think the long term charter to the Newbuild vessels that we've that we've ordered the over the past two years. So those are clearly we intend to take delivery of each vessel we are eagerly await.
Those vessels they are clearly in line with our vessel strategy and commercial strategy. So there is a there is no intention from the company to cancel or delay or any other any of those contracts on the more traditional charter market when we get charter from that the tonnage.
<unk> existing tonnage as opposed to the Newbuild tonnage that I was just referring to in 'twenty. One 'twenty. Two we did a we did enter into a significant amount of contract duration of three to five years. So by and large. This is what is driving the average duration of what's left in that you know chartering.
Yeah.
The agreements so meaning better between 'twenty three 'twenty four we have that we have that you are a few vessels up for renewal.
But it will really come back in 2025 and beyond yes, we saw that in 'twenty five and deal now when that when we look at the other vessels that come up for renewal in the 'twenty three 'twenty four that's a reality of 50 vessels most of them, but it is very likely depending on what the market does.
If the market conditions remain.
Difficult most of those vessels will be delivered.
We do not intend to break any of our commitment to visit any of the tonnage provider, we will make the decision to deliver tonnage when we have the ability to do so or engaged early with some tonnage provider to potentially discuss extension. If we think and act are lower.
Obviously, if we think that these are said vessel.
We'd be able to use the words for it for a longer period.
With respect to your second point, and and slippage is difficult to assess to what extent it will have a significant impact clearly for us that we are we are very much.
In front of that of that matter, because we are awaiting a 15000 teu ships.
Got it.
The 10 nine of those ships initially were expected to be delivered in 2000 and the 'twenty. Three we have received the first one we know that we will receive the second thing. They said is coming in the coming weeks, but we've been that we've been advised that there might be delays, but delays for some of the vessels.
That said, we are meant to be delivered to us in 2023 from that very specific shipyard. So we do think that the.
Some of the shipyards.
Asia.
Do you have a manpower a resource the resource issue, which is that it.
Yes, there's no reason to think that it is not widely affecting your overall the overall the industry. When it comes to the other vessels that we have for deliveries towards the end of the year ended 2024.
Today, we don't know yet, but we anticipate that there might be as well.
Some are some delay.
Okay.
Sure on the first answer when you say redelivered.
Our current jobs will be redelivered does that mean.
Back to the charterer.
Correct Yeah.
Yeah, Yeah, that's right okay. Thank you very much.
The next question is coming from flattish fifth Kumar. Please go ahead.
Come to some sort of presentation.
I've got three questions here. So first one on the restocking right. So obviously that has been the sense of optimism that volumes are looking.
As it turns into second half of the year looks like they.
Are you seeing signs of recovery and what are you actually see based on your conversations with shippers on all of those are passing differ from the normal seasonality.
At the moment, so do you normally get out of this one can be yours.
And the second one is obviously around the two on the line and so obviously the most coming what are the other and so what does it mean for you.
Uh huh.
How much of your sales have stayed a little less clear on what is it exposure to law school of course, a M. A C.
And then into.
Into the building.
Dave on for FY 'twenty.
Given that we are like Seattle and Portland.
Stuck on a normalization, we'll still stick with your quarterly dividend payment.
So there'll be quarters.
Cool.
Probably end up lots of innovation.
Oh, what are your thoughts on did the IPO.
The quarterly dividend payments the frontier.
I guess that is so with regards to your first question on the potential restocking and we are and where do you see that this is really early days to to come to a definitive conclusion as to when the volume or the demand will come back up because clearly we are getting some.
Early indications are early signs that the.
Inventories there and once the inventories have come down to the level, where they might be theaters want them to be yet.
The demand will be surface and that from a familiar seasonality perspective also E. Coli in the first quarter of 2023 with the traditional slack season, that's a is that the period.
In terms of ordering and and demand affecting the trade lanes, where we are where we operate so today in the in the early days of 2023, we have the combination of those two elements, which is the destocking and the AR and the slack season, and hence why again, we truly do believe that we are.
Afterwards, with Petronas and things of that.
And therefore in terms of in terms of flips ensure rates in some of the sub trade rates when it comes to the second question.
The two women and the break up or the future breakup of the alliance between the Maersk in there and then let's see I think by enlarge this.
Does it come out as a significant surprise four for all of us that have been watching it.
Said this industry and how everyone is there is that pursuing different strategies as far as we're concerned we have been collaborating with both of them and we do collaborate with both of them on the transpacific trade lanes, obviously, but also individually on some other trades a relationship with them.
And with the MSCI is a extremely good we have benefited and I think all of US did benefit from the working together over the past five years now.
Four years should I say it was started in 2018 the summer.
And we intend to continue to discuss with the with all the major shipping lines on the trade, where we do believe it makes sense from a company perspective from an industry perspective, and from an end customer perspective to better utilize and better operate all our seats.
We are an important player in terms of in terms of market share on the transpacific and we see no reason why we would not continue to work with a nurse, who you're going to see with both of them. He was one of them.
In the longer term.
Now the relationship is still very strong and very efficient.
I think the January 2025.
Is.
They said they will let offerings.
And with respect to your last question on the on the dividend yesterday, you know it's been a very important if it seems that one of the for the company to return significant capital to shareholders and we've been I think the true to that statement since day one.
We are for now there's no reason to think that our dividend policy you may change as of today.
As it is as you know.
No every quarter no matter, what irrespective of the dividend policy. The board makes a decision and we use a decision every quarter as to what is the dividend that is due to be paid so we see where we end up in 2023 every quarter. The discussion that will take place at a board level.
Okay. Thank you just a follow up on the.
I meant on the loss coming from our seat so what do you need to save us into 'twenty can be far beyond that.
We will close them both on the sea and loss on an individual basis.
I, what I'm, saying is I don't know, whether we where I see no reason to think that we want that's what I'm trying to get to I don't know we don't know.
Today, and what will be the new Uh Huh sett.
Set up and you see in terms of Maersk.
Maersk and MSC will continue to operate independently whether there would be some of the sub that reshuffling in the way of the other shipping lines do well.
In the interconnect and we don't know what we don't know that what we know is that there is no reason for us not to consider working with any of them are always some others by the wave could also be a very possible.
We'd see what we are what we think is that we are a very important player again in terms of the market share that the comment, especially on the Asia U S East Coast Trade Lane, and we have a very efficient fleet with the 15000 Teu ships that we are currently you know.
Getting up in this industry. So we are very interesting partner to partner with and there's no reason for us to think that that so that you know the future. When it comes to corporation is them is a it's not going to offer opportunities for them and for all potential future partners.
<unk>.
Okay. Thank you.
Thank you.
The next question is coming from Alexia dung Gummy. Please go ahead.
Oh hi, thank for taking my question. So like I said the gun from Barclays. Just curious as well. Please firstly on the outlook for 2023, given Eli problem until around the base improving in the second half.
We basically are expecting EBIT loss in the first half.
And subsequent to that I want to keep.
You talked about how he has your expectation of what grades improving from here.
Much improvement are you.
To meet your guidance range, I mean to the extent you're writing a check.
Secondly on then following up on Sam's question number that shows and you know the 58 vessels that are coming up for renewal over the next two years. It actually has a 41.
As already childcare.
Yeah.
The medicine, they should be it should be kind of a double digit decline in guinea clause or lag.
You can get from the government of handling it but would you be willing to reduce your fleet size from 130.
Container ships at the moment down by 58.
And under what scenario would you do that and then finally <unk>.
Sounds like Capex can you remind us.
Gosh cockpit.
This is for 'twenty 'twenty four and these topics as well thanks.
Sure. Thank you. Thank you Alex Yeah first.
First on your question with regards to the outflow for 2023.
Yes, we are as we said we expect the second half to be an improvement compared to the first we did not as you know.
To provide the kind of give you a when it comes to the guidance you were asking whether that meant that we were expecting losses in that in the early part of 2023.
Not necessarily that we didnt say that right in terms of in terms of improvement also for us when it comes to the question on quickly what do we expect to see as far as we're concerned yeah. It can be also a function of where we end up in our contract discussions with our customers.
Transpacific trade Lane.
If we are saying that 50% of all we're getting is meant to be a contracted than the and then 60% would be on the spot, but it'd be a different a different effect, if we end up otherwise but.
<unk> that we ended up where we are I think we all have from a from a contract rate perspective. This is a this is.
It provides us the comfort.
The second half in 2023 would be a better market conditions overall sourcing.
With respect to your second question. The 58 vessels that are potentially covered for renewal against the 41 that we will take delivery from over the next two year period. So all the way.
Through the end of 2000, and the end of 'twenty 'twenty four.
As to whether we will let go all of those 58 vessels, we see it's another one for one I think this is what we need to we need to also to bear in mind and very likely that the smaller capacity. Therefore, the feeder science type of shifts that country. We employ are redeployed.
On the intra Asia business.
The fifth rig lines, but also.
Yeah.
The only place that services those are those are vessels.
VT buyer by the company to maintain service servicing those are those areas, where we seek to everybody to wave quite significant opportunity for growth So what will happen.
Is that there would be a cascading effect, we will let's say call larger capacity vessels those we'd come in and replace ships that could be redeployed elsewhere. So we start with the 15000 Teu ships that can come in and replace the 10000 teu that potentially.
Employer on the USC School goes we go and of sizes that is D and so on and so forth and then at the end of the day. We left we will let go a bus a mess of the vessels that we'd be in the panamax size type of a segment, mainly because the big ships will keep of the big East West trade with smaller.
If you decide if the size vessels that will be a very much needed also in the.
Regional trades, where we where we operate.
And in terms of lifting your last question on the on the Capex we have.
Our commitment to a pay down of delivery of each of the.
Angie your vessels ordered.
Down payments as you know $30 million for ship for the 15000 Teu vessels and the $20 million to ship for the 7000 Teu vessel. So that adds up to a roughly 140 give you haven't seen that 2023 and another 300.
And a $50 million in the 2024. According to the current did you very pretty very scheduled on top of that we will have the renewal of the Av equipment, which will be limited because we have.
<unk> already secured and the and purchase a lot of equipment back in 2021 with the congestion that being the rest of the problem. This year the rotation of the equipment is being facilitated so we need less.
Equipments in order to carry the same amount the same cargo that steel will continue to replace all the boxes with newer one and we will continue to do that.
In the developing our digital solutions, which is very important to us we've been at the forefront of the digital transformation of the industry and we intend to continue to keep this a technological edge.
And then can I just ask a clarification on the first answer I mean, historically contract great shocked at the spot at a discount to spot for obvious reasons, because shippers get a kind of a discount so they can make.
Going forward. Thanks.
The comments you made kind of makes me think that you know.
So the opposite you if that's the case why should a contract rate.
Distract us fault or a premium sports conceptually.
Yeah.
Yeah, you know I mean, I think in today's market environment is a is a little bit unique in a way.
Just.
Right.
Clearly the two years of extraordinary.
The situation we are today at a from the pendulum effect if I wanted if I could use this.
This analogy yeah.
The market has done a very strongly.
Opposite to the opposite direction I think goes to the shippers and the diners I know that there is a and.
And neither ranch sector is a natural equilibrium that we should all the tender lean the lean towards and otherwise.
Otherwise that the descriptions might might affect the shippers as well if we don't get the rates that we believe makes sense for us to continue feeling really stop saving in that and then if we stopped selling than it may have more.
A more drastic affect on the ability of a customer to secure.
Secure their supply chain. So so I think it's not that simple in terms of the where the market dynamics are leading us today.
Our scheme at quite a few weeks ahead of us before we finalized the discussion on the on the contract.
So whether we land above below or close to a stop to it remains it remains to be seen for us like I said, we had our gifting and all of this is our customer by customer we don't treat all customers. The same way. We are we are we have a.
One to one relationship and that and we know exactly where where we can do and where we want to where we want to do.
Thank you.
This concludes our Q&A session and I hand back to early Glickman, President and CEO for closing comments.
Thank you.
Despite challenging market conditions towards the end of the <unk>, we continue to execute our global knee strategy deliver outstanding execution and profitable growth in 2022.
EBITDA and EBIT results are all time records.
Our results.
Before sending cash generation and strong balance sheet.
We declared a Q4 dividend support centers $7 69 million below.
Six $4 per share.
While the near term the liner industry outlook may may be uncertain.
Increased supply and weaker demand trends.
As discussed we believe there are reasons for optimism as we look good.
We took deliberate steps over the past two years to both Diversifies, our commercial presence and improve our cost structure.
Enabling the company to continue to slip more normalized environment like the one we are.
Right.
Experiencing today.
We remain highly confident.
We have the right strategy in place, we saw competitive friction cost effective newbuild capacity underway.
Zero investment in digital innovation and disruptive technologies continued to position zoom to best serve customers and shareholders over the long term.
Thank you all.
Okay.
[laughter].
Ladies and gentlemen, the conference has now concluded and you may disconnect your telephone.
Thank you for joining and have a pleasant day goodbye.
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