Q2 2024 ZIM Integrated Shipping Services Ltd Earnings Call

August 19, 2024

Speaker Change: Thank you for standing by and welcome to the XIM Integrated Shipping Services second quarter 2020 for earnings conference call. All lines have been placed on mute to prevent any background noise.

Operator: 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: After the speakers are marked, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Thank you.

Speaker Change: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. Thank you. I'd now like to turn the call over to Elana Holzman. You may begin.

Operator: 2020 for earnings conference call.

Elana Holzman: I'd now like to turn the call over to Elana Holzman. You may begin.

Elana Holzman: Thank you, operator, and welcome to ZIM's second quarter 2024 financial results conference call.

Operator: All lines have been placed on mute to prevent any background

Elana Holzman: Thank you, Operator, and welcome to ZIM's second quarter 2024 financial results conference call.

Elana Holzman: Joining me on the call today are Eliy Glickman, Jim's President and CEO, and Xavier Destriau's MCFO. 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 reasonable. We wish to caution you that just statements reflect only the company's current expectations and that actual events or results may differ, including the theory.

Elana Holzman: Joining me on the call today are Eliyahu Glickman, Vice President and CEO, and Xavier Destriau, CFO.

Speaker Change: 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 of future events, or results. We believe that our expectations and assumptions are reasonable.

Speaker Change: We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ, including materiality.

Elana Holzman: You are kindly referred to consider the risk factors and cautionary language described in the Dr. Winston Company file with the Securities and Exchange Commission, including our 2023 Annual Report on Form 20-F, filed with the SEC in March 2024. We undertake no obligation to update these forward-looking statements.

Speaker Change: You are kindly referred to consider the risk factors and cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2023 Annual Report on Form 20-F filed with the SEC in March 2024.

Eliyahu Glickman: At this time, I would like to turn the call over to ZIM CEO in the second quarter, and we are pleased to report strong Q2 results today, highlighted by double-digit volume growth to a record-high-cade volume and increased guidance for the full yield. ZIM generated net income of $373 million and revenue of $1.9 billion at the second quarter. Adjusted EBDA was $766 million and adjusted EBDA was $488 million. Reflecting adjusted EBDA margin of 40 percent and adjusted EBDA margin of 25 percent. We maintain a total liquidity of $2.3 billion at quarter n. I am particularly proud of the record we set this quarter in terms of our credit volume, which totaled $952,000.

Operator: After the speaker's remarks, there will be a question-and-answer session.

Speaker Change: We undertake no obligation to update these forward-looking statements.

Speaker Change: At this time, I would like to turn the call over to ZIM's CEO, Eliyahu Glickman.

Operator: If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Operator: If you would like to withdraw your question, simply press star one again.

Operator: Thank you.

Eliyahu Glickman: Thank you, Elana, and welcome, everyone.

Operator: I'd now like to turn the call over to Elana Holzman.

Elana Holzman: You may begin.

Eliyahu Glickman: ZIM positive momentum continues in the second quarter and we are pleased to report strong Q2 results today, highlighted by double-digit volume growth to a record high carried volume and increased guidance for the full year.

Elana Holzman: Thank you, operator, and welcome to ZIM's second quarter 2024 financial results conference call.

Elana Holzman: Joining me on the call today are Eli Glickman, ZIM's President and CEO, and Xavier Destriau, ZIM CFO.

Speaker Change: Dream generated net income of $373 million and revenue of $1.9 billion at the second quarter.

Speaker Change: Adjusted EBITDA was $766 million and Adjusted EBIT was $488 million.

Speaker Change: reflecting adjusted EBITDA margin of 40%.

Speaker Change: an adjusted EBIT margin of 25%.

Speaker Change: We maintain a total liquidity of 2.3 billion dollars at quarter end.

Speaker Change: I am particularly proud of the record we set this quarter in terms of our carried volume, which totals 952,000 TEU.

Eliyahu Glickman: We achieved double-digit growth as planned, significantly outpacing global container market growth. This achievement is, of course, a direct outcome of our strategic decision to upscale our capacity, but not less important, has been the exceptional execution of our employees globally.

Elana Holzman: 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 of future events or zones.

Elana Holzman: We believe that our expectations and assumptions are real.

Speaker Change: We achieved double-digit growth as planned, significantly outpacing global container market growth.

Elana Holzman: We wish to caution you that such statements reflect only the company's current expectations and that actual events or results may differ, including material. You are kindly referred to consider the risk factors and cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2023 Annual Report on Form 20-F filed with the SEC in March 2020.

Speaker Change: This achievement is of course a direct outcome of our strategic decision to upscale our capacity but not less important has been the exceptional execution of our employees globally.

Eliyahu Glickman: For that, I would like to send them. In our performance today and continue market trends, we have raised our 24 guidance ranges.

Speaker Change: For that, I would like to send them.

Speaker Change: Slide number five.

Speaker Change: We are giving our performance

Speaker Change: Today, and continue market strength, we have raised our 24 guidance ranges.

Eliyahu Glickman: We anticipate full-year adjusted EBDA between $2.6 billion to $3 million and adjusted EB between $1.45 billion to $1.85 billion.

Speaker Change: We anticipate full-year adjusted EBITDA between $2.6 billion to $3 billion and adjusted EBIT between $1.45 billion to $1.85 billion.

Eliyahu Glickman: Xavier, our C4, will discuss additional factors driving our 24 guidance in his prepared comments. We remain committed to returning capital to shareholders, such as our dividend policy, which for a payout representing 30% of quarterly net income. Our board of directors has declared a dividend of 93 cents per share, or a total of $112 million on account of Q2 results. As we look toward the remainder of the year, our outlook for the second half has improved, reflected in our new guidance. We now expect a stronger backup of 24 health compared to the first half.

Speaker Change: Xavier, our CFO, will discuss additional factors driving our 24 guidance in his prepared comments.

Speaker Change: We remain committed to returning capital to shareholders.

Speaker Change: As such, our dividend policy, which calls for a payout representing 30% of quarterly net income,

Speaker Change: Our Board of Directors has declared a dividend of $0.93 per share over a total of $112 million on account of Q2 results.

Speaker Change: As we look toward the remainder of the year, our outlook for the second half has improved.

Speaker Change: reflected in our new guidance.

Speaker Change: We now expect a stronger back half of 24 as compared to the first half.

Eliyahu Glickman: Today, the Red Sea crisis has not improved. On-going supply constraints include import congestion and equipment shortages coupled with strong demand have continued to put upward pressure on spot rates that will anticipate endurance through the third quarter. However, taking a longer-term view, market dynamics still point to supply growth significantly outpacing demand, setting up for a version following recent peak rates. While the container shipping industry has always been volatile, our objective at Zim was to build a resilient business with a transformed fleet. Importantly, we have maintained flexibility to adjust the size of our fleet, depending on how market conditions evolve moving forward and to match our commercial strategy.

Speaker Change: To date, the Red Sea crisis has not improved.

Speaker Change: Ongoing supply constraints, including port congestion and equipment shortages, coupled with strong demand, have continued to put upward pressure on sport rates that we anticipate enduring through the third quarter.

Speaker Change: However, taking a longer term view, market dynamic steel points of supply grow significantly outpacing demand.

Speaker Change: Setting up

Speaker Change: for a version following recent peak rates.

Speaker Change: While the container shipping industry has always been volatile,

Speaker Change: Our objective at ZIM was to build a resilient business with a transformed fleet.

Speaker Change: Importantly,

Speaker Change: We have maintained flexibility to adjust the size of our split depending on how market conditions evolve moving forward and to match our commercial strategy.

Eliyahu Glickman: Slide number six. The primary pillar of Zim transformation is our fleet renewal program, and we continue to make tangible progress as new vessels are delivered. Thus far, 38 of our 46 new build containerships have been added to Zim fleet, including all 10,000, 15,000 TULNG power vessels and 12 out of 18,000 TULNG power vessels. As we previously highlighted, our new build vessels are more modern, fuel efficient, larger, and better suited to the trade in which we operate. How cost per KTU continue to decline as this costs effective and fuel efficient new build vessels replace older, less efficient and more expensive charter capacity, which we continue to re-deliver back to the vessel owners as planned.

Speaker Change: Slide number six.

Speaker Change: The primary pillar of ZIM transformation is our Fleet Renewal Program and we continue to make tangible progress as new vessels are delivered.

Speaker Change: Thus far, 38 of our 46 new-built container ships have been added to ZIM fleet, including all 10 15,000TU LNG-powered vessels and 12 out of 18 8,000TU LNG-powered vessels.

Speaker Change: sp

Speaker Change: As we have previously highlighted, our new big vessels are more modern, fuel efficient, larger, and better suited.

Speaker Change: to the trade in which we operate.

Speaker Change: Our costs per KTEU continue to decline as these cost-effective and fuel-efficient new-built vessels replace older, less efficient, and more expensive charter capacity.

Speaker Change: which we continue to re-deliver back to the vessel owners as planned.

Eliyahu Glickman: We have also seen financial benefit from our utilization of LNG since it has proven to be more cost-effective than LSA 4. We are also pleased to see that other shipping companies are increasingly recognizing the advantages of LNG-powered vessels. ZIM is proud to have been an early adopter and advocate for LNG as a key solution to drive the transition to lower carbon-mine fuels. This decision has enabled us today to be the first and only liner to operate two separate services on the Azure to US history with LNG fuel vessels. As I already mentioned, our up-scaled fleet has delivered commercial benefit as we carried record of 952,000 to this quarter and increased of 11.7 compared to Q2 last year and 13% compared to the first quarter.

Speaker Change: We have also seen financial benefits from our utilization of LNG since it has proven to be more cost effective than LSA4.

Speaker Change: We are also pleased to see that other shipping companies are increasingly recognizing the advantages of LNG-powered vessels.

Speaker Change: Zim is proud to have been an early adopter.

Speaker Change: and advocate for LNG as a key solution to drive the transition to lower carbon mine fuels.

Zim: This decision has enabled us today to be the first and only liner to operate two separate services on the Asia to U.S. East Coast trade with LNG-fueled vessels.

Zim: As already mentioned, our Upscale fleet has delivered commercial benefits as we carried a record of 900.

Zim: 52,000 EU this quarter, an increase of 11% compared to Q2 last year and 13% compared to the first quarter.

Eliyahu Glickman: Specifically, our transfer system, our main thread, we grew our current volume in Q2 by 29% compared to Q2 last year and 22% compared to the first quarter. We remain agent in our fleet deployment and focus on adapting the services we offer as customer demand shifts. As such, at the end of the second quarter, we launch a second premium service from China to the US West Coast to meet tone demand on this thread. Also contributing to our Q2 result and improve guidance is the decision we made earlier this year to revisit our commercial approach of an approximately 50 to 50 fleet between spot and contrast volume.

Speaker Change: Specifically, our trans-Pacific, our main trade, we grew our current volume in Q2 by 29% compared to the Q2 last year, and 22% compared to the first quarter.

Operator: 2024 Earnings Conference Call.

Operator: 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

Operator: All lines have been placed on mute to prevent any background noise.

Speaker Change: We remain agile in our fleet deployment and focus on adopting the services we offer as customer demand shifts.

Elana Holzman: I'd now like to turn the call over to Elana Holzman. You may begin. Thank you, operator, and welcome to ZIM's second quarter, 2024 Financial Results Conference Call. Joining me on the call today are Eliy Glickman, Jim's president and CEO, and Xavier Destriau's MCFO. 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.

Speaker Change: As such, at the end of the second quarter, we launch a second premium service from China to the U.S. West Coast.

Operator: Thank you.

Speaker Change: to meet strong demand on this trade.

Elana Holzman: I'd now like to turn the call over to Elana Holzman.

Speaker Change: Also, contributing to our Q2 results and improved guidance is the decision we made earlier this year to revisit our commercial approach of an approximately 50 to 50 split between spot and contract volume.

Elana Holzman: You may begin.

Eliyahu Glickman: Instead, our spot exposure in the trans-Pacific trade is approximately 65%. It may be linked to benefit more significantly from the upward pressure we have seen on spot trade. I would like also to highlight our growing volume in the Latin America trade as we have taken steps to launch new lines and extend our market share in this region. We grew our volume in this quarter in Latin America by 90% compared to Q2 last year and 8% versus Q1 24. As we have discussed previously, Latin America has been a focal point for us where we see long-term growth and profitability potential, as we are pleased with the progress we are making in increasing our market share.

Speaker Change: Instead, our spot exposure in the Trans-Pacific trade is approximately 65%, enabling them to benefit more significantly from the upward pressure we have seen on spot trade.

Elana Holzman: We believe that our expectations and assumptions are reasonable. We wish to caution you that just statements reflect only the company's current expectations and that actual events or results may differ, including the theory. You are kindly referred to consider the risk factors and cautionary language described in the Dr. Winston Company file with the Securities and Exchange Commission, including our 2023 annual report on form 20F, filed with the SEC in March 2024. We undertake no obligation to update these forward-looking statements.

Speaker Change: I would like also to highlight our growing volume in the Latin America trade as we have taken steps to launch new lines and extend our market share in this region.

Speaker Change: We grew our volume this quarter in Latin America by 90...

Speaker Change: by 90% compared to Q2 last year and 8% versus Q1-24.

Elana Holzman: Thank you, operator, and welcome to ZIM's second quarter, 2024 Financial Results Conference Call.

Speaker Change: As we have discussed previously, Latin America has been a focal point for us, where we see long-term growth and profitability potential as we are pleased with the progress we are making in increasing our market share.

Eliyahu Glickman: Slide number seven. Before I turn the call over to Xavier, I would like to briefly touch on our tech investments. We believe there continues to be value in investing in companies developing destructive technologies, complementary to our coal-shipping business as a potential growth engine. We recently added two very interesting companies to our portfolio. The first carbon blue offers investment in a climate-related technology, which participated in the seed funding round, alongside other financial and strategic investors. Carbon Blue develops ground-breaking water-based carbon dioxide removal technology that is unique in its ability to utilize any type of water in its environmentally friendly process.

Elana Holzman: We undertake no obligation to update these four, At this time, I would like to turn the call over to ZIM's CEO, Eliyahu Glickman.

Speaker Change: Slide number seven.

Speaker Change: Before I turn the call over to Xavier, I would like to briefly touch on our tech investments.

Elana Holzman: Joining me on the call today are Eliy Glickman, Jim's president and CEO, and Xavier Destriau's MCFO.

Speaker Change: Weebly

Speaker Change: There continues to be value in investing in companies developing disruptive technologies complementary to a core shipping business as a potential growth engine.

Eliyahu Glickman: Thank you, Elana, and welcome, everyone.

Speaker Change: We recently added two very interesting companies to our portfolio.

Elana Holzman: We believe that our expectations and assumptions are reasonable.

Speaker Change: The First Carbon Blue

Speaker Change: Our first investment in a climate-related technology.

Elana Holzman: We wish to caution you that just statements reflect only the company's current expectations and that actual events or results may differ, including the theory. You are kindly referred to consider the risk factors and cautionary language described in the Dr. Winston Company file with the Securities and Exchange Commission, including our 2023 annual report on form 20F, filed with the SEC in March 2024.

Eliyahu Glickman: We maintain a total liquidity of $2.3 billion at quarter n. I am particularly proud of the record we set this quarter in terms of our credit volume, which totaled $952,000. We achieved double-digit growth as planned, significantly outpacing global container market growth. This achievement is, of course, a direct outcome of our strategic decision to upscale our capacity, but not less important, has been the exceptional execution of our employees globally.

Speaker Change: who participated in the seed funding round alongside other financial and strategic investors.

Elana Holzman: We undertake no obligation to update these forward-looking statements.

Speaker Change: Carbon Blue develops ground-breaking water-based carbon dioxide removal technology that is unique in its ability to utilize any type of water in its environmentally friendly process.

Eliyahu Glickman: As such, Carbon Blue's technology has the potential to convert any existing water infrastructure into an asset curveable of removing CO2, or any water source, frame the water up to absorb most CO2 from the atmosphere. The second investment is in Peak Commerce, the startup developing an innovative robotic grasping technology. Peak Commerce's solution combines advanced robotics and artificial intelligence to transform how logistic centers and warehouses handle packaging processes, overcoming the difficulty robots have in identifying items with different ways of shape. Peak commerce unique solution enhance efficiency, reduce operational cost, and ensure accuracy, setting new standards in the logistic industry.

Speaker Change: As such, Carbon Blue's technology has the potential to convert any existing water infrastructure into an asset capable of removing CO2 from any water source, bringing the water up to absorb more CO2 from the atmosphere.

Eliyahu Glickman: For that, I would like to send them. In our performance today and continue market trends, we have raised our 24 guidance ranges. We anticipate full-ear adjusted EBDA between $2.6 billion to $3 million and adjusted EB between $1.45 billion to $1.85 billion.

Speaker Change: The second investment

Speaker Change: is in peak commas.

Speaker Change: A start-up developing an innovative robotic grasping technology, a e-commerce solution.

Speaker Change: combines advanced robotics and artificial intelligence to transform how logistics centers and warehouses handle packaging processes, overcoming the difficulty robots have in identifying items with different weight or shapes.

Eliyahu Glickman: Adjusted EBDA was $766 million and adjusted EBDA was $488 million. Reflecting adjusted EBDA margin of 40 percent and adjusted EBDA margin of 25 percent.

Speaker Change: P Commerce's unique solutions enhance efficiency, reduce operational costs, and ensure accuracy setting new standards in the logistics industry.

Eliyahu Glickman: We maintain a total liquidity of $2.3 billion at quarter n.

Xavier Destriau: Xavier, our C4, will discuss additional factors driving our 24 guidance in his prepared comments.

Eliyahu Glickman: As we previously indicated, while this is investment or small, they are consistent with our organizational culture, which promotes a natural innovation in creativity. We are proud to have these companies address critical market needs and fulfil their potential as active strategic investors.

Eliyahu Glickman: We remain committed to returning capital to shareholders, such as our dividend policy, which for a payout representing 30% of quarterly net income, our board of directors has declared a dividend of 93 cents per share, or a total of $112 million on account of Q2 results. As we look toward the remainder of the year, our outlook for the second half has improved, reflected in our new guidance. We now expect a stronger backup of 24 health compared to the first half.

Speaker Change: As we previously indicated, while these investments are small, they are consistent with our organizational culture, which promotes and nurtures innovation and creativity.

Speaker Change: We are proud to help these companies address critical market needs and fulfill their potential as active strategic investors.

Xavier Destriau: On this note, I will turn the call over to Xavier. I will see for a more detailed discussion of our financial results, our update 24 guidance, as well as additional comments on the market environment. Xavier, please.

Speaker Change: On this note, I will turn the call over to Xavier, our CFO, for a more detailed discussion of our financial results, our Update 24 guidance, as well as additional comments on the market environment.

Xavier Destriau: Thank you, and again welcome everyone. On slide 8, we present key financial and operational highlights. Our second co-author financial results are indicative of continued market strengths based on innovative freightways and strong demand. Our second co-author average freightways to TU was $1,674. The 40% year-over-year increase and 15% increase from the prior quarter. During the first six months of the year, our average freightways to TU of $1,569 was 22% higher than in the first half of 2000. at 23. At the same time, we continue to see the positive impact on carry volumes, as Eliy just mentioned. Our Q2 carry quantities of 952,000Qs was erected, an 11% higher year-over-year.

Xavier Destriau: Xavier, please.

Xavier Destriau: Thank you, Eliyahu, and again, welcome everyone.

Xavier Destriau: On slide 8, we present key financial and operational highlights.

Eliyahu Glickman: ZIM Positive Momentum continues in the second quarter.

Eliyahu Glickman: ונועמ undesosto��ים יחסיים קבועות של לתוץ קוריב ראשון היום העובד שתי המטרים בשונים מדו-שגרייים, LOOK UP to the record high carried volume and increased guidance for the full year Net Income, $373 million and revenue of $1.9 billion at the second quarter.

Xavier Destriau: Our second quarter financial results are indicative of continued market strength based on elevated freight rates and strong demand.

Xavier Destriau: Our second quarter average freight rate per T.U. was $1,674.

Speaker Change: A 40% year-over-year increase and a 15% increase from the prior quarter.

Speaker Change: During the first six months of the year, our average freight rate per T.U. of $1,569 was 22% higher than in the first half of 2023.

Speaker Change: At the same time, we continue to see the positive impact on carbon volumes. As Eli just mentioned, our Q2 carbon quantity of 952,000 TUs was a record, an 11% higher year-over-year.

Xavier Destriau: ZIM growth compared to February, to market growth of 6%. Revenue from not-containerized cargo, which reflects mostly our car carrier services, totaled $128 million for the quarter, compared to $136 million in the second quarter of 2023. Total revenue in the first half of 2024, $3.5 million, were up $811 million, or 30% year-over-year. Our free cash flow in the second quarter totaled $712 million, compared to $321 million in the second quarter of 2023. And turning now to the balance sheet, total debt increased by $585 million since prior year-end, mainly due to the net effect on the incoming of larger vessels with longer-term charted duration attached.

Speaker Change: This growth compared favorably to market growth of 6%.

Speaker Change: Revenues from non-containerized cargo, which reflects mostly our car carrier services, totaled $128 million for the quarter, compared to $136 million in the second quarter of 2023.

Eliyahu Glickman: The primary pillar of Zim transformation is our fleet renewal program and we continue to make tangible progress as new vessels are delivered. Thus far, 38 of our 46 new build containerships have been added to Zim fleet, including all 10,000, 15,000 TULNG power vessels and 12 out of 18,000 TULNG power vessels. As we previously highlighted, our new build vessels are more modern, fuel efficient, larger and better suited to the trade in which we operate.

Speaker Change: Total revenues in the first half of 2024 of 3.5 billion dollars were up 811 billion or 30% Euro per year.

Speaker Change: Our free cash flow in the second quarter totaled $712 million compared to $321 million in the second quarter of 2023.

Speaker Change: And turning now to the balance sheet, total debt increased by $585 million since prior year-end.

Speaker Change: mainly due to the net effect of the incoming of larger vessels with longer term charter durations attached.

Xavier Destriau: Turning to our fleet, we currently operate 148 vessels, including 132 containerships, with a total capacity of approximately $765,000 Qs, as well as 16 car tires. This compares to the overall fleet of 147 vessels, as of our prior earnings goal in May. The change from three months ago resulted from the delivery of eight new builds and the re-delivery of seven vessels.

Eliyahu Glickman: How cost per KTU continue to decline as this costs effective and fuel efficient new build vessels replace older, less efficient and more expensive charter capacity, which we continue to re-deliver back to the vessels to the vessel owners as planned. We have also seen financial benefit from our utilization of LNG since it has proven to be more cost effective than LSA 4. We are also pleased to see that other shipping companies are increasingly recognizing that advantages of LNG powered vessels.

Speaker Change: Turning to our fleet

Speaker Change: We currently operate 148 vessels, including 132 container ships, with total capacity of approximately 755,000 T.U.

Speaker Change: as well as 16 cow tigers.

Speaker Change: This compares to an overall fleet of 147 vessels above our prior earnings score in May.

Speaker Change: The change from 3 months ago resulted from the delivery of 8 new builds and the re-delivery of 7 vessels.

Xavier Destriau: However, it is worth noting again that why we continue to operate a similar number of vessels, our operating capacity continues to grow, and this is the result of them replacing the smaller, less-cost-effective tonnage with larger, more cost-efficient new-wheel capacity. As of today's call, 38th of the 46th new-wheel vessels team as committees do, have joined our fleet, including all 10,000 T-U energy vessels, 4,000 T-U vessels, 12 of the 8,000 T-U energy vessels, and 12 of the smaller, one with 5,500 and 5,300 T-U ships. Excluding the new-wheel capacity, the average remaining duration of our childhood tonnage continues to trend out and is now 18 months compared to 19.7 months in late May.

Speaker Change: However, it is worth noting again that while we continue to operate a similar number of vessels, our operating capacity continues to grow.

Eliyahu Glickman: ZIM is proud to have been an early adopter and advocate for LNG as a key solution to drive the transition to lower carbon-mine fuels. This decision is enabled us today to be the first and only liner to operate two separate services on the Azure to US history with LNG fuel vessels. As I already mentioned, our up-scaled fleet has delivered commercial benefit as we carried record of 952,000 to this quarter and increased of 11.7 compared to Q2 last year and 13% compared to the first quarter.

Speaker Change: This is the result of ZIM replacing smaller, less cost-effective tonnage with larger, more cost-efficient new wheel capacity.

Speaker Change: As of today's call, 38 of the 46 Nubian vessels team has committed to have joined our fleet, including all 10 15,000 TEU energy vessels.

Speaker Change: 4 12,000 T.U. vessels, 12 of the 8,000 T.U. energy vessels, and 12 of the smaller wide beam 5,500 and 5,300 T.U. ships.

Eliyahu Glickman: I am particularly proud of the record we set this quarter in terms of our credit volume, which totaled $952,000.

Speaker Change: Excluding the new build capacity, the average remaining duration of our chartered tonnage continues to trend down and is now 18 months compared to 19.7 months in late May.

Xavier Destriau: We have a total of 15 vessels up for charter renewal in the reminder of 2024, as compared to the expected delivery of eight new builds during this period. In addition, we have another 36 vessels up for renewal in 2025. That's what you see highlighted. This gives us ample flexibility to ensure our fleet size matches the market opportunity.

Eliyahu Glickman: Specifically, our transfer system, our main thread, we grew our current volume in Q2 by 29% compared to the Q2 last year and 22% compared to the first quarter. We remain agent in our fleet deployment and focus on adapting the services we offer as customer demand shifts. As such, at the end of the second quarter, we launch a second premium service from China to the US West Coast to meet tone demand on this thread.

Speaker Change: We have a total of 15 vessels up for charter renewal in the reminder of 2024 as compared to the expected delivery of 8 new builds during this period.

Speaker Change: In addition, we have another 36 vessels up for renewal in 2025.

Eliyahu Glickman: For that, I would like to send them.

Speaker Change: As previously highlighted, this gives us ample flexibility to ensure our fleet size matches the market opportunities.

Xavier Destriau: Next, moving on to slide 10, we present ZIM's second quarter and six months to 2024 financial results compared to last year's Q2 and first half. I just did a bidire in this year's second quarter, what $766 million, and I just did a bid was $488 million. I just did a bidire a bid margin for the second quarter where 40% and 25% respectively, as compared to 21% and a negative 11% in the second quarter of last year. For the first six months of 2024, I just did a bidire margin was 34%, and I just did a bidire margin was 19%.

Speaker Change: Next, moving on to slide 10, we present DIMM's second quarter and six months 2024 financial results compared to last year's Q2 and first half.

Eliyahu Glickman: Also contributing to our Q2 result and improve guidance is the decision we made earlier this year to revisit our commercial approach of an approximately 50 to 50 fleet between spot and contrast volume. Instead, our spot exposure in the trans-Pacific trade is approximately 65%. It may be linked to benefit more significantly from the upward pressure we have seen on spot trade. I would like also to highlight our growing volume in the Latin America trade as we have taken steps to launch new lines and extend our market share in this region.

Eliyahu Glickman: Adjusted EBITDA was $766 million, and Adjusted EBIT was $488 million, reflecting adjusted EBITDA margin of 40%, an adjusted EBIT margin of 25%.

Speaker Change: Adjusted EBITDA in this year's second quarter was $766 million and adjusted EBIT was $488 million.

Speaker Change: Adjusted EBITDA and EBIT margin for the second quarter were 40% and 25% respectively, as compared to 21% and negative 11% in the second quarter of last year.

Speaker Change: For the first six months of 2024, Adjusted EBITDA margin was 34% and Adjusted EBIT margin was 19%.

Xavier Destriau: This is compared to 24% of a negative 6% in 2023. Next income in the second quarter was $373 million compared to a net loss of $230 billion in the same quarter of last year.

Eliyahu Glickman: We grew our volume in this quarter in Latin America by 90% compared to Q2 last year and 8% versus Q124. As we have discussed previously, Latin America has been a focal point for us where we see long-term growth and profitability potential as we are pleased with the progress we are making in increasing our market share.

Speaker Change: This is compared to 24% of the negative 6% in 2023.

Speaker Change: Net income in the second quarter was $373 billion compared to a net loss of $213 billion in the same quarter of last year.

Xavier Destriau: Turning now to slide 11, we present our current volumes broken out by trade loans. As you can see, we saw significant growth on the trans-Pacific and Latin America trade in the second quarter, attributable to our larger capacity vessels and also to new lines. Trans-Pacific and Latin America volume grew 29% and 90% respectively year over year. We expect to see continued volume growth during the reminder of 2024 as we continue to apply our capacity, and we may not try to achieve our double digit volume growth target this year. On slide 12 is our cash flow bridge.

Eliyahu Glickman: אנחנו חייבים לציוד כללי של 2.3 ביליון דולר במילה וחצי.

Speaker Change: i

Speaker Change: Turning now to slide 11, we present our Carried Volumes broken out by trade law.

Speaker Change: As you can see, we saw significant growth on the Trans-Pacific and Latin America trade in the second quarter.

Speaker Change: attributable to our larger capacity vessels and also to new lines.

Speaker Change: Trans-Pacific and Latin America volume grew 29% and 90% respectively year-over-year.

Eliyahu Glickman: Slide number seven. Before I turn the call over to Xavier, I would like to briefly touch on our tech investments. We believe there continues to be value in investing in companies developing destructive technologies, complement complementary to our coal-shipping business as potential growth engine. We recently added two very interesting companies to our portfolio. The first carbon blue offers investment in a climate-related technology, which participated in the seed funding round, alongside other financial and strategic investors.

Eliyahu Glickman: Carbon Blue develops ground-breaking water-based carbon dioxide removal technology that is unique in its ability to utilize any type of water in its environmentally friendly process. As such, carbon blue's technology has the potential to convert any existing water infrastructure into an asset curveable of removing CO2, or any water source, frame the water up to absorb most CO2 from the atmosphere. The second investment is in peak commerce, the startup developing and innovative robotic grasping technology, peak commerce solution, combines advanced robotics and artificial intelligence to transform how logistic centers and warehouses handled packaging processes, overcoming the difficulty robots have in identifying items with different ways of shape.

Speaker Change: We expect to see continued volume growth during the remainder of 2024 as we continue to upsize our capacity and remain on track to achieve our bubble digit volume growth target this year.

Eliyahu Glickman: שקוד אני בטוח ממול של סורת המערכת אחת בש ктоר בעקבות חדMAN, שהיא בינית של, 952,000 TU, We achieved double-digit growth as planned, significantly outpacing global container market growth.

Eliyahu Glickman: This achievement is, of course, a direct outcome of our strategic decision to upscale our capacity, but not less important has been the exceptional execution of our employees globally.

Xavier Destriau: For the quarter, I just did a bidire of $766 million compared to $777 billion of cash flow generated from operating activities. Other cash flow significance items for the quarter is $598 million of debt service, mostly related to our lease liability repayment. In Q2, we pay $73 million as down payment on the delivery of our energy vessels.

Speaker Change: On slide 12 is our cash flow bridge, so for the quarter our adjusted EBITDA of 766 million dollars converted into 777 million dollars of cash flow generated from operating activities.

Speaker Change: Other cash flow significant item for the quarter is the $598 million of debt service, mostly related to our lease liability repayment.

Eliyahu Glickman: For that, I would like to send them.

Speaker Change: In Q2, we paid $73 million as down payment on the delivery of our energy vessel.

Xavier Destriau: Turning now to our 2024 guidance, as you already heard from Ellie, our outlook for the remainder of 2024 is now significantly stronger than previously assumed. With the second half of 2024, now expected to be better than the first. As such, we are raising our full year 2024 guidance and now expect to generate adjusted EBITDA between $2.6 billion and $3 billion and adjusted EBIT between $1.45 billion and $1.85 billion. Our input guidance is that we must almost entirely by the strengths we are seeing in spot rates, which we now expect will continue at least through the third quarter.

Eliyahu Glickman: Slide number five.

Eliyahu Glickman: Improving our performance, We have raised our 24 guidance raises.

Speaker Change: Moving now to our 2024 guidance.

Speaker Change: As you already heard from Eli, our outlook for the remainder of 2024 is now significantly stronger than previously assumed, with the second half of 2024 now expected to be better than the first.

Speaker Change: As such, we are raising our full year 2024 guidance and now expect to generate adjusted EBITDA between $2.6 billion and $3 billion.

Eliyahu Glickman: Peak commerce unique solution enhance efficiency, reduce operational cost, and ensure accuracy setting new standards in the logistic industry. As we previously indicated, while this is investment or small, they are consistent with our organizational culture, which promotes a natural innovation in creativity. We are proud to have these companies address critical market needs and fulfil their potential as active strategic investors.

Eliyahu Glickman: אנחנו מתכוונים לתקוות EBITDA במידה בין 2.6 ביליון דולר ל-3 ביליון דולר ולתקוות EBITDA בין 1.45 ביליון דולר ל-1.85 ביליון דולר, אנחנו שiyoruz olives לדעה עוד דברים שמאוד מש Xuanzeng to returning capital to shareholders, such that our dividend policy, which calls for a payout representing 30% of quarterly net income, הממשלת שלנו הוכרחה דיווידנט של 93 סמפר שייר או סימפר של 112 מיליון דולר בעקבות קיום 2.

Eliyahu Glickman: עד שמעו מהממשיך במינמטה של התחנה, המחתג הרחיבי של פחדת medio edit Mitglמתothers, reflected in our new guidance.

Eliyahu Glickman: אנחנו עכשיו חייגים לתקופה יותר גדולה של 24 כפי שהתקופה הראשונה.

Eliyahu Glickman: Do današnjega dneva, nisemo izboljšali krizis Red Sea.

Speaker Change: and adjusted EBIT between 1.45 billion and 1.85 billion dollars.

Eliyahu Glickman: Ongoing supply constraints, including port congestion and equipment shortages, coupled with strong demand, have continued to put upward pressure on sport rates, that will anticipate endurance through the third quarter.

Eliyahu Glickman: Portugal P older than Ngunn-ethian you market dynamics till points to supply grow significantly outpacing demand, Setting up, for a version following recent peak rates, while the container shipping industry has always been volatile.

Speaker Change: Our input guidance is driven almost entirely by the strengths we are seeing in spot rates.

Xavier Destriau: This, in turn, contributed to a higher credit assumption incorporated into our current guidance. As compared to the freight rate assumptions, we did incorporate into the guidance we provided back. Our volume assumptions for our 2024 guidance remain unchanged, and we continue to expect to achieve double-digit volume growth in 2024 versus 2023. This is consistent with the assumptions driving our initial guidance in March. Our thinking new program continues to give us very good visibility into our cost strategy here, and as we deliver childhood capacity at Gland, and we see that you will be secured in 2021 and 2022.

Speaker Change: which we now expect will continue at least through the third quarter.

Speaker Change: This, in turn, contributed to a higher freight rate assumption incorporated into our current guidance, as compared to the freight rate assumptions we did incorporate into the guidance we provided back in May.

Speaker Change: Our volume assumptions for 2024 guidance remain unchanged, and we continue to expect to achieve double-digit volume growth in 2024 versus 2023.

Speaker Change: This is consistent with the assumptions driving our initial guidance in March.

Speaker Change: Our Safe Renewal Program continues to give us very good visibility into our cost structure this year.

Speaker Change: As we redeliver chartered capacity at plant, and we see the new bills secured in 2021 and 2022.

Xavier Destriau: On this note, I will turn the call over to Xavier, I will see for a more detailed discussion of our financial results, our update 24 guidance, as well as additional comments on the market environment. Xavier, please. Thank you, and again welcome everyone. On slide 8, we present key financial and operational highlights. Our second co-author financial results are indicative of continued market strengths based on innovative freightways and strong demand. Our second co-author average freightways to TU was $1,674.

Xavier Destriau: As previously indicated, we did not need to turn to the childhood market to secure additional tonnage to address the rate decreases, and therefore our 2024 results are not impacted by the added rate currently observed in the childhood market. Our worker cost assumptions are lovely and changed in our current guidance as compared to the online assumptions for the guidance we provided in May.

Speaker Change: As previously indicated, we did not need to turn to the charter market to secure additional knowledge to address the Red Sea crisis.

Eliyahu Glickman: In our performance today and continue market trends, we have raised our 24 guidance ranges. We anticipate full-ear adjusted EBDA between $2.6 billion to $3 million and adjusted EB between $1.45 billion to $1.85 billion.

Speaker Change: And therefore, our 2024 results are not impacted by the elevated rates currently observed in the childhood market.

Eliyahu Glickman: Xavier, our C4, will discuss additional factors driving our 24 guidance in his prepared comments.

Speaker Change: Our Volcker Court assumptions are largely unchanged in our current guidance, as compared to the underlying assumptions for the guidance we provided in May.

Xavier Destriau: Moving to some data points, which we believe on the score are expectations for the reminder of 2024. The underlying supply demand balance for the near-to-meter has been and remains one of significant oversupply. Yet, as you all know, security concerns of a safe transit through the RFCs and strengths of the Babel Monday have dramatically changed this reality into asserted equilibrium, and extended voice durations around the capable growth have absorbed significant nominal capacity. From May onwards, congestion mostly in the Asian and West Mid-Twarts along with equipment constraints puts additional pressure on the global supply chain. You can see the continuous upward trend in the ocean timeliness indicator, or OTI, on the right.

Eliyahu Glickman: Our objective at ZIM was to build a resilient business with a transformed fleet. Importantly, we have maintained flexibility to adjust the size of our splits, depending on how market conditions evolve moving forward and to match our commercial strategy.

Speaker Change: i

Speaker Change: Moving to some data points which we believe underscore our expectations for the reminder of 2024.

Xavier Destriau: The 40% year-over-year increase and 15% increase from the prior quarter. During the first six months of the year, our average freightways to TU of $1,569 was 22% higher than in the first half of 2000, at 23. At the same time, we continue to see the positive impact on carry volumes, as Eliy just mentioned, our Q2 carry quantities of 952,000Qs was erected, an 11% higher year-over-year. ZIM growth compared February to market growth of 6%.

Eliyahu Glickman: Slide numbers.

Eliyahu Glickman: הפריל הסכנון של זן-התשוטלה הוא תרגשות נהודה הצבאית שלנו ומדענים שה לנו spirits לתורד כתוביות ברורות כמה עוץ Mama חfert, מכניסהkoechnika.com 38 מרכבות ממנranwer TMC 46 חור� שהשתר героיים COTELEGRAY COTELEGRAY COTELEGRAY COTELEGRAY COTELEGRAY COTELEGRAY COTELEGRAY COTELEGRAY and 12 out of 18 8,000 to you LNG power vests.

Eliyahu Glickman: כמו שהבחרנו לפעמים, עריכים חדשיים נמצאים יותר מודרניים, פיול אופטימיים, גדולים, ויותר נפגעים, to the trade in which we operate.

Eliyahu Glickman: Our costs per kWh continue to decline as these cost-effective and fuel-efficient new-built vessels replace older, less efficient, and more expensive charter capacities, which we continue to re-deliver back to the vessel owners as planned. We have also seen financial benefits, from our utilization of LNG since it has proven to be more cost effective than LSFA.

Eliyahu Glickman: We are also pleased to see that other shipping companies are increasingly recognizing the advantages of LNG-powered vessels.

Speaker Change: The underlying supply-demand balance for the near-term and mid-term has been and remains one of significant oversupply.

Speaker Change: Yet, as you all know, security concerns over safe transit through the Arab Sea and Straits of Bab el-Mande.

Speaker Change: have dramatically changed this reality into a certain equilibrium as extended voyage durations around the Cape of Good Hope have absorbed significant nominal capacity.

Speaker Change: From May onwards, congestion mostly in Asian and West Med ports, along with equipment constraints, put additional pressure on the global supply chain.

Xavier Destriau: Revenue from not-contenerized cargo, which reflects mostly our car carrier services, totaled $128 million for the quarter, compared to $136 million in the second quarter of 2023. Total revenue in the first half of 2024, $3.5 million were up, $811 million, or 30% year-over-year. Our free cash flow in the second quarter totaled $712 million, compared to $321 million in the second quarter of 2023. And turning now to the balance sheet, total debt increased by $585 million since prior year-end, mainly due to the net effect on the incoming of larger vessels with longer term charted duration attached.

Speaker Change: You can see the continued upward trend in the Ocean Tangency Indicator, or OTI, on the right.

Xavier Destriau: To remind you, the OTI measures the journey on a container from the time it is set to leave the factory to the time it is picked up from its destination port. These longer journeys on the main deep sea trade point to added pressure on the supply side.

Speaker Change: To remind you, the OTI measures the journey of a container from the time it is set to leave a factory to the time it is picked up from its destination port.

Speaker Change: These longer journeys on the main deep-sea trade point to added pressure on the supply side.

Xavier Destriau: And the outcome of this pressure is evident in the next slide where we show the spotlight development in before regional trade in which we operate. We first saw signs of these trade improvements in May when the second wave of stock rates increases began and spilled over to trade not directly infected by the RFC crisis. Nevertheless, the magnitude of these increases we have seen was seen. At this point in time, though we've witnessed the SEFI decline since its mid-July peak, these declines are not unexpected as new vessel deliveries continue, particularly of large capacity metals, alleviating the pressure on supply.

Speaker Change: And the outcome of this pressure is evident in the next slide, where we show the spot rate development in four regional trades in which we operate.

Speaker Change: We first saw signs of this rate improvement in May, when a second wave of stock rate increases began and spilled over to trades not directly impacted by the RISD crisis.

Speaker Change: Nevertheless, the magnitude of the increases we have seen was still unforeseen.

Xavier Destriau: Turning to our fleet, we currently operate 148 vessels, including 132 containerships, with total capacity of approximately $765,000Qs, as well as 16 car tires. This compares to the overall fleet of 147 vessels, as of our prior earnings goal in May. The change from three months ago resulted from the delivery of eight new builds and the re-delivery of seven vessels. However, it is worth noting again that why we continue to operate a similar number of vessels, our operating capacity continues to grow, and this is the result of them replacing the smaller less-cost effective tonnage with larger, more cost-efficient new-wheel capacity.

Speaker Change: At this point in time, though we've witnessed the SCFI decline since its mid-July peak, these declines are not unexpected as new vessel deliveries continue, particularly of large-capacity vessels.

Xavier Destriau: Now, the demand side, we also saw in May a neptic in demand which compounded with the supply pressure and contributed to the magnitude of the spotlight increase with experience. Container volumes from Asia to the US, our main trade, have been strong in the first half of the year. Yet, there is still question as to whether the strength in demand we are witnessing is the full forward in peak season demand, or longer term, more sustainable at the end of the month. What this has been and still is a positive peak season, the build-up in inventory levels in the US, which you can see on the right, suggests that we will likely see no more seasonality trends this year.

Speaker Change: alleviating the pressure on supply.

Speaker Change: Now on the demand side, we also saw in May an uptick in demand which compounded with the supply pressure and contributed to the magnitude of the spot rate increases we've experienced.

Speaker Change: Container volumes from Asia to the US, our main trade, have been strong in the first half of the year.

Speaker Change: Yet there is still questions as to whether the strength in demand we are witnessing is a pull forward in peak season demand, or longer term, more sustainable in demand.

Speaker Change: While this has been and still is a positive peak season, the build-up in inventory levels in the US, which you can see on the right, suggests that we will likely see no more seasonality trends this year.

Xavier Destriau: As of today's call 38th of the 46th new-wheel vessels team as committees do, have joined our fleet, including all 10,000 T-U energy vessels, 4,000 T-U vessels, 12 of the 8,000 T-U energy vessels, and 12 of the smaller, one with 5,500 and 5,300 T-U ships. Excluding the new-wheel capacity, the average remaining duration of our childhood tonnage continues to trend out, and is now 18 months compared to 19.7 months in late May. We have a total of 15 vessels up for charter renewal in the reminder of 2024, as compared to the expected delivery of eight new builds during this period. In addition, we have another 36 vessels up for renewal in 2025. That's what you see highlighted. This gives us ample flexibility to ensure our fleet size matches the market opportunity.

Xavier Destriau: The uncertainty with respect to the rate and environment for Q4 events higher, with the duration of the Red Sea crisis a critical unknown. While the less likely than are in the short term, if the Red Sea crisis ends and sailing through the Red Canal with use, over-supply we likely put significant pressure on red. On the other hand, as long as significant supply remains tighter in the extended voyages around the Cape, rates are likely to continue to slide up at a slower rate given the added capacity and typical seasonality.

Speaker Change: The uncertainty with respect to the race environment for Q4 remains high, with the duration of the Red Sea crisis a critical unknown.

Speaker Change: While a less likely scenario is the short-term, if the Red Sea crisis ends and sailing through the Suez Canal resumes, oversupply will likely put significant pressure on rates.

Speaker Change: On the other hand, as long as significant supply remains tied up in the extended voyages around the Cape, rates are still likely to continue to slide at a slower pace given the adding capacity and typical seasonality.

Operator: Thank you, and on that note, we will open the call to your questions. Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Eliyahu Glickman: ZIM is proud to have been an early adopter.

Eliyahu Glickman: ומתעה בדיוקא לתוך LMG, לתיקור בהתחילת לשחק בכרמן מרobyן מילון.

Speaker Change: Thank you. And on that note, we will open the call to your questions.

Eliyahu Glickman: This decision has enabled us today to be the first and only liner to operate two separate services on the Asia to U.S. East Coast trade with LNG-fueled vessels.

Eliyahu Glickman: כמו שאספרנו, מנגינה של 11.7% מפרך ל-2002 ו-13% מפרך ל-1.25% ספציפית, איך טרנס פרסיפיק, איך מנטרד, גרם עקרון שלנו ב-Q2 ב-29% במישר ל-Q2 בשנה האחרונה ו-22% במישר ל-1.25% We remain agile in our fleet deployment and focus on adapting the services we offer as customer demand shifts.

Eliyahu Glickman: As such, at the end of the second quarter, we launch a second premium service from China to the U.S. West, to meet strong demand on this trade.

Eliyahu Glickman: ועוד פעם, לתפקיד שלנו לתפקיד ולהתפקיד על הוועדה, הייתה החלטה שצריכנו לפני העולם להחזיר את התפקיד המרכזי שלנו של חלק מ-50% ל-50% בין מרקע ומרקע קבוצה.

Eliyahu Glickman: במקרה הזה, התפקיד מרקע שלנו במרחק הטרנס-פסיפיק הוא בוועד 65%, מגיע להתפקיד יותר מיוחד מההתפקיד המרכזי שלנו במקרה.

Speaker Change: Thank you. We will now begin the question and answer session. If you would like to ask a question, please press star 1 in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. Your first question comes from the line of Omar Nocta from Jeffreys. Your line is open.

Eliyahu Glickman: כמו שאמרנו קודם, הלטינית-אמריקה הייתה נקודה נקודה לנו, כשאנחנו רואים תקופה יחסית, ופוטנציאל של תקופה, כשאנחנו שמחים עם הפעולה שאנחנו עושים בהקדמות תקופת המדינה.

Eliyahu Glickman: Slide number six.

Omar Nokta: Your first question comes from a line of Omar Nukta from Jeffries. Your line is open. Thank you. Good afternoon. Congrats on a very, very strong quarter and a big guidance revision for the year. Nice to see double-digit growth in the volumes, but also at the same time to see that in the freight rate, which many times doesn't go hand in hand. I wanted to ask; I have a couple of questions, but just wanted to ask on the volumes. You have highlighted several times in your comment about your target of double-digit growth for the full year.

Eliyahu Glickman: Before I turn the call over to Xavier, I would like to briefly touch on our tech investors.

Eliyahu Glickman: Weebly, una simplificació continua al valor de inversar enl vestire em empresas que desenvolupan tecnologías destructivas complementarias a um themas de supspystema livre Eastern Europe Grace como engénes de flrecho potencial.

Eliyahu Glickman: We recently added two very interesting companies to our portfolio.

Eliyahu Glickman: The first carbon blue.

Eliyahu Glickman: אוניברסיטת קלימאנטית שלנו.

Eliyahu Glickman: שמתי תללאים שאפשר ל trainers חברכם עלי וחברכם א mésר, The Carbon Blue Group has developed ground-breaking water-based carbon dioxide removal technology, that is unique in its ability to utilize any type of water in its environmentally friendly process.

Eliyahu Glickman: As such, Carbon Blue's technology has the potential to convert any existing water infrastructure into an asset capable of removing CO2 from any water source, bringing the water up to absorb more CO2 from the atmosphere.

Speaker Change: Thank you, Eliyahu and Xavier. Good afternoon.

Xavier Destriau: Next, moving on to slide 10, we present ZIM's second quarter and six months to 2024 financial results compared to last year's Q2 and first half. I just did a bidire in this year's second quarter, what $766 million and I just did a bid was $488 million. I just did a bidire a bid margin for the second quarter where 40% and 25% respectively as compared to 21% and a negative 11% in the second quarter of last year.

Eliyahu Glickman: The second investment, is in big commas.

Eliyahu Glickman: Startup Developing an Innovative Robotic Grasping Technology, eCommerce Solutions.

Eliyahu Glickman: מתraktion של מארק κדש Woah!

Speaker Change: Congrats on a obviously very, very strong quarter and a big guidance revision for the year.

Eliyahu Glickman: ואבנJosh introduces in Archaeo-Website Facebook Page who combines advanced robotics and Artificial Intelligence through transformed how Logistics Centers and Warehouses handle packaging processes, Robots serve in identifying items of different weight or shape, eCommerce's unique solutions enhance efficiency, reduce operational costs, and ensure accuracy, setting new standards in the logistics industry.

Eliyahu Glickman: As we previously indicated, while these investments are small, they are consistent with our organizational culture, which promotes and nature innovation and creativity.

Eliyahu Glickman: We are proud to help these companies address critical market needs and fulfill their potential as active strategic investors.

Eliyahu Glickman: On this note, I will turn the call over to Xavier, our CFO, for a more detailed discussion of our financial results, our Update 24 guidance, as well as additional comments on the market environment.

Speaker Change: Nice to see double-digit growth in the volumes, but also at the same time to see that in the freight rates, which many times that doesn't go hand in hand.

Xavier Destriau: Xavier, please.

Xavier Destriau: Thank you, Eliyahu, and again, welcome everyone.

Speaker Change: I wanted to ask, I have a couple of questions, but I just wanted to ask on the volumes. You've highlighted several times in your comments about your target of double-digit growth for the full year. The figure for the second quarter of 952,000 TEUs is obviously a big jump and a gap up from what you've done over the past several quarters.

Eliyahu Glickman: The figure for the second quarter of 952,000 TEUs is obviously a big jump in a gap up from what you've done over the past several quarters. I know you've taken delivery of some bigger shifts, and so that's helped. But just as we think about volumes going forward, do you think this level is a new maybe baseline or run rate for them? Is there any color you can give us on the third quarter and how these volumes have spared thus far? Yes, all right. It's a good question. And the short answer, with we basically hope so clearly, as we've been upgrading and exciting our capacity.

Xavier Destriau: For the first six months of 2024, I just did a bidire margin was 34%, and I just did a bidire margin was 19%. This is compared to 24% of a negative 6% in 2023. Next income in the second quarter was $373 million compared to a net loss of $230 billion in the same quarter of last year.

Speaker Change: I know you've taken delivery of some bigger ships and so that's helped, but just as we think about volumes going forward Do you think this level is a new maybe baseline or run rate for XIM? And is there any color you can give us on the third quarter and how these volumes have fared thus far?

Speaker Change: i

Speaker Change: Yes, Omar, it's a good question and the short answer is that we basically hope so. Clearly, as we've been upgrading and upsizing our capacity,

Eliyahu Glickman: We keep on increasing our operational storage. There we operate. You don't take a seven hundred and fifty thousand TEUs. By the end of the year, when we will have received the remaining eight sheets that are yet to be delivered. And we've returned 15,000, 15,000 smaller vessels. We will end up operating with equivalent capacity close to eight hundred thousand TEUs. So for us to clearly benefit from the lower cost per TEU carry, we need to make sure that at the same time we increase the volume that we end up carrying. So we set a new record.

Xavier Destriau: Turning now to slide 11, we present our current volumes broken out by trade loans. As you can see, we saw significant growth on the trans-partific and Latin America trade in the second quarter, attributable to our larger capacity vessels and also to new lines. Trans-partific and Latin America volume grew 29% and 90% respectively year over year. We expect to see continued volume growth during the reminder of 2024 as we continue to apply our capacity and we may not try to achieve our double digit volume growth target this year.

Speaker Change: We keep on increasing our operative knowledge.

Speaker Change: Today we operate the Evotech 750,000TU. By the end of the year, when we will have received the remaining headships that are yet to be delivered.

Speaker Change: and 15 smaller vessels, we will end up operating an equivalent capacity close to 800,000 TUs. So, for us to clearly benefit from the lower...

Speaker Change: we need to make sure that at the same time we increase the volume that we end up carrying. So we set a new record this quarter which is 952,000TU We expect to continue to grow quarter after quarter and reach 1 million TU per quarter.

Xavier Destriau: On slide 8, we present key financial and operational highlights.

Eliyahu Glickman: This water is not 150,000 TEUs. We expect to continue to grow quarter after quarter and reach one million TEU per quarter in the not to disappear. Future.

Xavier Destriau: On slide 12 is our cash flow bridge. For the quarter, I just did a bidire of $766 million compared to $777 billion of cash flow generated from operating activities. Other cash flow significance items for the quarter is $598 million of debt service mostly related to our lease liability repayment. In Q2, we pay $73 million as down payment on the delivery of our energy vessels.

Omar Nokta: Okay, thank you. Interesting. And I guess, you know, maybe big picture, obviously, on pre-cash flow. In 2024, it turned out to be much stronger than you initially, and we all initially expected. And pre-cash flow has now turned positive quite meaningfully. How do you think about the uses of this excess cash flow that you're now bringing in into them, you know, whether it's strategically or with respect to the balance sheet, any thoughts you can give on the uses of that additional pre-cash? Look, I think the first comment that I would want to make is that we are very happy and very pleased with the, you know, how the quarter is determined out of the outfit that we might drop out of the year.

Speaker Change: in the not-so-distant future.

Speaker Change: Okay, thank you. Interesting, and I guess...

Speaker Change: You know, maybe a big picture, obviously, on free cash flow. 2024 has turned out to be much stronger than you initially and we all initially expected. And free cash flow has now turned positive quite meaningfully. How do you think about the uses of this excess cash flow that you're now bringing into them, whether strategically or with respect to the balance sheet? Any thoughts you can give on the uses of that additional free cash?

Eliyahu Glickman: As we look toward the remainder of the year, our outlook for the second half has improved, reflected in our new guidance. We now expect a stronger backup of 24 health compared to the first half.

Xavier Destriau: Turning now to our 2024 guidance, as you already heard from Ellie, our outlook for the reminder of 2024 is now significantly stronger than previously assumed. With the second half of 2024, now expected to be better than the first. As such, we are raising our full year 2024 guidance and now expect to generate adjusted EBITDA between $2.6 billion and $3 billion and adjusted EBIT between $1.45 billion and $1.85 billion. Our input guidance is that we must almost entirely by the strengths we are seeing in spot rates, which we now expect will continue at least through the third quarter.

Xavier Destriau: Our second quarter financial results are indicative of continued market strength based on elevated freight rates and strong demand.

Speaker Change: Look, I think the first comment that I would want to make is that we are very happy and very pleased with the, you know, how the quarter did turn out and the outlook for the remainder of the year. So, continuing to...

Xavier Destriau: Our second quarter average freight rate per T.U. was $1,674. 40% year-over-year increase and a 15% increase from the prior quarter.

Xavier Destriau: During the first six months of the year, our average freight rate per T.U. of $1,569 was 22% higher than in the first half of 2020.

Xavier Destriau: At the same time, we continue to see the positive impact on carried volumes.

Eliyahu Glickman: So continuing to strengthen, as in the day, the balance sheet of the company, and the more the balance sheet and the capital structure is strong, the more opportunities we have in terms of capital allocation. So I think in terms of prioritization, we will continue to make sure that we allocate capital to our assets, vessels, and containers. We will continue to legitimize the fleet of containers that we operate. For the vessel perspective, we need a significant completion; we are completing our significant transformation that was initiated back in 2021-22, so maybe there's a rush of that front.

Speaker Change: to strengthen, at the end of the day, the balance sheet of the company. And the more the balance sheet and the capital structure...

Speaker Change: The more opportunities we have in terms of capital allocation.

Speaker Change: So I think in terms of prioritization, we will continue to make sure that we allocate capital to our assets, vessels and containers. We will continue to rejuvenate the fleet of containers that we operate.

Xavier Destriau: This in turn contributed to a higher credit assumption incorporated into our current guidance. As compared to the freight rate assumptions, we did incorporate into the guidance we provided back. Our volume assumptions for our 2024 guidance remain unchanged and we continue to expect to achieve double digit volume growth in 2024 versus 2023. This is consistent with the assumptions driving our initial guidance in March. Our thinking new program continues to give us very good visibility into our cost strategy here, and as we deliver childhood capacity at Gland, and we see that you will be secured in 2021 and 2022.

Speaker Change: of the Vessel Perspective with these significant concretions, we are completing our significant transformation.

Speaker Change: that was initiated back in 2021-2022, so maybe let's rush on that front. And as importantly, I think we want to continue to...

Omar Nokta: And, importantly, I think we want to continue to return capital to shareholders. So we've done so since the IPO, and we've consistently bi-bio-occupied the policy in terms of paying to our shareholders, and we tend to continue to do so as well in the foreseeable future. Got it. Thank you.

Speaker Change: return capital to shareholders. So we've done so since the IPO and we've been consistently buied by our dividend policy in terms of dividends paid to our shareholders and we intend to continue to do so as well in the foreseeable future.

Omar Nokta: And then just maybe a final one for me, and a follow-up to just the last one on the dividends. Obviously, you paid another, or you declared a 30% payout for this quarter, just the second one this year, and presumably another one significantly is coming in the third quarter. How do you think, or perhaps maybe the board viewing the potential of the full 50% year end? I know it's obviously at the discretion of the board, but do you think it's as simple as if the market remains above long-term averages, then 50% is realistic, or do you think there's a mindset to prefer to hold on to the excess cash?

Speaker Change: Got it. Thank you. And then just maybe a final one for me and a follow-up to just the last one on the dividends. Obviously, you've paid another, or you've declared a 30% payout for this quarter. It's your second one this year.

Speaker Change: and presumably another one significantly is coming in the third quarter. How do you think, or how is perhaps maybe the board viewing the potential?

Speaker Change: of the full 50% at year end. I know it's obviously at the discretion of the board, but do you think it's as simple as if, you know, the market remains above long-term averages?

Speaker Change: then 50% is realistic? Or do you think, or is the mindset to prefer to hold on to the excess cash given maybe the uncertainty as you highlighted the order book or the deliveries of the capacity is outpacing demand growth? How are you thinking about that in terms of?

Eliyahu Glickman: I'm given maybe the uncertainty, and as you highlighted, the order book or the deliveries of the capacity is outpacing demand growth. How are you thinking about that in terms of that true up to 50% is it? I guess I'm trying to ask, is the mentality of the company to hold on to cash, or pay it out if the market remains firm? Any colleague can give there. Look, I think maybe today is a little bit early for us to give a clear answer to that question. I think the board and the company will closely look when the times come, and that will be as far as the potential to work towards next year.

Xavier Destriau: The underlying supply demand balance for the near-to-meter has been and remains one of significant oversupply. Yet, as you all know, security concerns of a safe transit through the RFCs and strengths of the Babel Monday have dramatically changed this reality into asserted equilibrium and extended voice durations around the capable growth have absorbed significant nominal capacity. From May onwards, congestion mostly in the Asian and West mid-twarts along with equipment constraints puts additional pressure on the global supply chain.

Eliyahu Glickman: Today, the Red Sea crisis has not improved.

Speaker Change: That true up to 50%, I guess I'm trying to ask, is the mentality of the company to hold on to cash or pay it out if the market remains firm? Any call you can give there.

Speaker Change: Look, I think maybe today is a little bit early for us to give a clear answer to that question.

Eliyahu Glickman: On-going supply constraints include import congestion and equipment shortages coupled with strong demand have continued to put upward pressure on spot rates that will anticipate endurance through the third quarter.

Speaker Change: I think the board and the company will closely look when the time has come, and that will be as far as the potential tour towards March next year.

Eliyahu Glickman: What do we think the following years will look like? Where will we be at an industry in terms of going back to a more normal way of operating, and the Red Sea disruption today are blurring a little bit the perception of what do you know what they look like? I think this question will be obviously very much of the agenda at the time, and the answer will be very much the function of what we have delivered on the full year basis in 2024 to start with, but also as important how do we project our film in the coming years depending on where the market dynamics and the big when we make that consideration again towards more.

Eliyahu Glickman: However, taking a longer-term view, market dynamics still point to supply growth significantly outpacing demand, setting up for a version following recent peak rates.

Xavier Destriau: You can see the continuous upward trend in the ocean timeliness indicator or OTI on the right. To remind you, the OTI measures the journey on a container from the time it is set to leave the factory to the time it is picked up from its destination port. These longer journeys on the main deep sea trade point to added pressure on the supply side.

Speaker Change: What do we think the...

Speaker Change: The following years will look like. Where will we be as an industry in terms of maybe going back to a more normal way of operating? The Red Sea disruptions today are blurring a little bit the...

Eliyahu Glickman: While the container shipping industry has always been volatile, our objective at Zim was to build a resilient business with a transformed fleet. Importantly, we have maintained flexibility to adjust the size of our fleet, depending on how market conditions evolve moving forward and to match our commercial strategy.

Eliyahu Glickman: Slide number six.

Speaker Change: the perception of what the new normal may look like.

Speaker Change: So I think this question will be obviously very much on the agenda at the time and the answer will be very much a function of what will we have delivered on a full year basis in 2024 to start with but also as importantly how do we project ourselves in the coming years depending on where the market dynamics.

Xavier Destriau: And the outcome of this pressure is evident in the next slide where we show the spotlight development in before regional trade in which we operate. We first saw signs of these trade improvements in May when the second wave of stock rates increases began and spilled over to trade not directly infected by the RFC crisis. Nevertheless, the magnitude of these increases we have seen was seen. At this point in time, though we've witnessed the SEFI decline since its mid-July peak, these decline are not unexpected as new vessel deliveries continue, particularly of large capacity metals, alleviating the pressure on supply.

Omar Nokta: Thank you. Yeah, understood. That makes a lot of sense and appreciate you giving that framework.

Speaker Change: and the BIM when we make that consideration again towards March next year.

Eliyahu Glickman: We are also pleased to see that other shipping companies are increasingly recognizing that advantages of LNG powered vessels.

Omar Nokta: That's it for me. Thanks, guys.

Speaker Change: Yeah, understood. That makes a lot of sense and appreciate you giving that framework. That's it for me. Thanks, guys.

Sathish Sivakumar: Your next question comes from a line of Sathish Sivakumar from City. Your line is open. Thanks, Xavier. Thank you. I've got three questions here. Maybe just to start off with on the tax rate. If you look at it and go to two, you are up less to million. How shall we think about going forward into quarter three and quarter four? I may be for the full year in terms of the tax charges on the PNL. And then the second one is around the vessels that are coming up for renewal. So you got about 51 vessels that are coming up for renewal, including 24 and 25.

Speaker Change: Your next question comes from the line of Satish Sivakumar from Citi. Your line is open.

Xavier Destriau: As Eli just mentioned, our Q2 carried quantities of 952,000 TUs was a record, an 11% higher year-over-year.

Satish Sivakumar: Thanks Eliyahu. I've got three questions here, maybe just to start off with on the tax rate.

Eliyahu Glickman: As I already mentioned, our up-scaled fleet has delivered commercial benefit as we carried record of 952,000 to this quarter and increased of 11.7 compared to Q2 last year and 13% compared to the first quarter. Specifically, our transfer system, our main thread, we grew our current volume in Q2 by 29% compared to the Q2 last year and 22% compared to the first quarter.

Xavier Destriau: Now, the demand side, we also saw in May a neptic in demand which compounded with the supply pressure and contributed to the magnitude of the spotlight increase with experience. Container Volumes from Asia to the US, our main trade, have been strong in the first half of the year. Yet, there is still question as to whether the strength in demand we are witnessing is the full forward in peak season demand, or longer term, more sustainable at the end of the month.

Satish Sivakumar: If you look at in Q2 you had a plus 2 million. How should we think about going forward in Q3 and Q4, maybe for the full year, in terms of the tax charges on the P&L?

Speaker Change: And then the second one is around the vessels that are coming up for renewal. So you got about 51 vessels that are coming up for renewal, including 24 and 25.

Eliyahu Glickman: We remain agent in our fleet deployment and focus on adapting the services we offer as customer demand shifts. As such, at the end of the second quarter, we launch a second premium service from China to the US West Coast to meet tone demand on this thread.

Sathish Sivakumar: Given whether it's our trade, would you still be interested in giving those vessels back, or would you look to renew them? And then the third one, you did slide that in the cashflow bridge where you pointed about 380 million down payments for 10 LNG vessels and also payment for five vessels. Or actually think about for the remaining eight vessels. And do you expect to take another debt service charge in the coming quarters, or will be mostly in 25? Yeah, thank you. Thank you, Xavier.

Speaker Change: given weather rates are today, would you still be interested in like giving those vessels back or would you look to renew them?

Xavier Destriau: What this has been and still is a positive peak season, the build-up in inventory levels in the US, which you can see on the right, suggests that we will likely see no more seasonality trends this year. The uncertainty with respect to the rate and environment for Q4 events higher, with the duration of the Red Sea crisis a critical unknown. While the less likely than are in the short term, if the Red Sea crisis ends and sailing through the Red Canal with use, over-supply we likely put significant pressure on red.

Speaker Change: And then the third one, you did add a slide there in the cash flow page where you pointed about.

Speaker Change: 380 million down payments for 10 LNG vessels

Speaker Change: and also payment for five vessels. How should we think about for the remaining eight vessels and do you expect to take another debt service charge in the coming quarters or it will be mostly in 2025? Yeah, thank you.

Xavier Destriau: On the other hand, as long as significant supply remains tighter in the extended voyages around the Cape, rates are likely, are still likely to continue to slide up a slower rate given the added capacity and typical seasonality.

Xavier Destriau: ZIM's growth compared February to market growth of 6%.

Xavier Destriau: Revenues from non-containerized cargo, which reflect mostly our car carrier services, totaled $128 million for the quarter, compared to $136 million in the second quarter of 2020.

Xavier Destriau: I'll try to take your question, whatever the other. So the first one, we'll respect to tax rates for the full year of 2024. We don't expect to interest significant tax charge in 2024, as we will still be able to benefit in the way from the taxes that we generated in 2023. And that we can carry forward in front of the profits that we are making or expect to make in 2024. We should not expect a significant tax charge in our early P&L. With respect to the vessel, the fleet plan, clearly when it comes to 2024, we intend to continue to execute on the strategy that we laid out already a few quarters back, which is the re-delivering or the vessels that come up from renewal.

Xavier Destriau: Total revenue in the first half of 2024 of 3.5 billion dollars were up 811 million or 30% EUR.

Xavier Destriau: Our free cash flow in the second quarter totaled $712 million compared to $321 million in the second quarter of 2023. And turning now to the balance sheet, total debt increased by $585 million since prior year-end, mainly due to the net effect of the incoming of larger vessels with longer-term charter durations attached.

Xavier Destriau: Turning to all three.

Speaker Change: Thank you, Satish. I'll try to take your questions one after the other. So the first one with respect to tax rates for the full 2024. We don't expect to incur a significant tax charge in 2024, as we will still be able to benefit, in a way, from the tax losses that we generated.

Xavier Destriau: Thank you and on that note, we will open the call to your questions. Thank you.

Speaker Change: in 2023 and that we can carry forward in front of the profit that we are making or expect to make in 2024.

Operator: We will now begin the question and answer session. If you would like to ask a question, please press star one in your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again.

Speaker Change: Thank you very much.

Xavier Destriau: We currently operate 148 vessels, including 132 container ships, with total capacity of approximately 755,000 TUs, as well as 16-caliber. This compares to the overall fleet of 147 vessels as of our prior earnings call in May. The change from 3 months ago resulted from the delivery of 8 new builds and the re-delivery of 7 beds. However, it is worth noting again that while we continue to operate a similar number of vessels, our operating capacity continues to grow. This is the result of ZIM replacing a smaller, less cost-effective tonnage with larger, more cost-efficient new build capacity.

Omar Nokta: Your first question comes from a line of Omar Nukta from Jeffries. Your line is open. Thank you. Good afternoon. Congrats on a very, very strong quarter and a big guidance revision for the year. Nice to see double-digit growth in the volumes, but also at the same time to see that in the freight rate, which many times doesn't go hand in hand. I wanted to ask, I have a couple of questions, but just wanted to ask on the volumes.

Speaker Change: With respect to the vessel, the fleet plan, clearly when it comes to 2024, we intend to continue to execute on the strategy that we laid out already.

Xavier Destriau: As of today's call, 38 of the 46 Nubia vessels the team has committed to have joined our fleet, including all 10 15,000 TEU energy vessels.

Xavier Destriau: 4 12,000 T.U.

Xavier Destriau: vessels, 12 of the 8,000 T.U.

Speaker Change: a few quarters back, which is re-delivering the vessels that come up for renewal. Those are smaller vessels, somewhat expensive capacity as well, that was secured in the times of

Xavier Destriau: energy vessels, and 12 of the smaller wide beam 5500 and 5300TU.

Xavier Destriau: And those are smaller vessels, somewhat expensive capacity as well, that will secure in the times of the COVID era days, not during which the charging rates were at elevated levels. And we continue to need to make room for these new ships that are yet to be delivered. These eight ships that are coming between now and the end of the year. And as I was saying, also very wrong, by doing just that, we will continue to increase our operating capacity from 70050 of the TU today to 80000 TU by the end of the year. Then it comes to 2025.

Eliyahu Glickman: It may be linked to benefit more significantly from the upward pressure we have seen on spot trade.

Eliyahu Glickman: I would like also to highlight our growing volume in the Latin America trade as we have taken steps to launch new lines and extend our market share in this region. We grew our volume in this quarter in Latin America by 90% compared to Q2 last year and 8% versus Q124. As we have discussed previously, Latin America has been a focal point for us where we see long-term growth and profitability potential as we are pleased with the progress we are making in increasing our market share.

Eliyahu Glickman: Slide number seven.

Omar Nokta: You have highlighted several times in your comment about your target of double-digit growth for the full year. The figure for the second quarter of 952,000 TEUs is obviously a big jump in a gap up from what you've done over the past several quarters. I know you've taken delivery of some bigger shifts and so that's helped. But just as we think about volumes going forward, do you think this level is a new maybe baseline or run rate for them?

Speaker Change: the COVID-era days, during which the charging rates were at elevated levels.

Xavier Destriau: Excluding the new build capacity, the average remaining duration of our chartered tonnage continues to trend down and is now 18 months compared to 19.7 months in late May. We have a total of 15 vessels up for charter renewal in the reminder of 2024 as compared to the expected delivery of eight new builds during this period.

Eliyahu Glickman: Before I turn the call over to Xavier, I would like to briefly touch on our tech investments.

Speaker Change: And we continue to need to make room for these new ships that are yet to be delivered.

Speaker Change: the eight ships that are coming between now and the end of the year. And as I was saying also earlier on, by doing just that, we will continue to increase our operating capacity from 750,000 TU today to 800,000 TU by the end of the year.

Xavier Destriau: In addition, we have another 36 vessels up for renewal in 2025.

Omar Nokta: Is there any color you can give us on the third quarter and how these volumes have spared thus far? Yes, all right. It's a good question. And the short answer with we basically hope so clearly as we've been upgrading and exciting our capacity. We keep on increasing our operational storage. There we operate. You don't take a seven hundred and fifty thousand TEUs. By the end of the year, when we will have received the remaining eight sheets that are yet to be delivered.

Xavier Destriau: And then we do not have any new bills delivered expected, but we have indeed the 36 ships that will cover for renewal in 2025. And we will need to make the determination as to whether we want to reach after a sum of all of these capacity to continue to operate on the 80000 TU equivalent voltage on it, depending on where the market will be in 2025 and mostly basis, when we have to make the decision to let go of the ship or to potentially seek rechartering of the capacity. And to be frank, that we would be very much a function of where the market is in terms of rate environment, where are we in terms of the congestion that we experience over the past few quarters, and where are we in terms of supply demand dynamics.

Speaker Change: Then comes 2025, and then we do not have any renewal delivery expected, but we have indeed 36 ships that will come up for renewal.

Xavier Destriau: As previously highlighted, this gives us ample flexibility to ensure our fleet size matches the market opportunity.

Speaker Change: And we will need to make the determination as to whether we want to recharter some or all of these capacities to continue to operate.

Speaker Change: on the 800,000TU equivalent tonnage, or less, depending on where the market will be in 2025 on a monthly basis when we have to make the decision to let go of the ship or to potentially seek rechartering of the capacity.

Omar Nokta: And we've returned 15,000, 15,000 smaller vessels. We will end up operating with equivalent capacity close to eight hundred thousand TEUs. So for us to clearly benefit from the lower cost per TEU carry, we need to make sure that at the same time we increase the volume that we end up carrying. So we set a new record. This water is not 150,000 TEUs. We expect to continue to grow quarter after quarter and reach one million TEU per quarter in the not to disappear.

Speaker Change: And to be frank, that will be very much a function of where the market is in terms of rate environment. Where are we in terms of the economy.

Speaker Change: conggestioned with experience

Speaker Change: Over the past few quarters, where are we in terms of supply-demand dynamics?

Xavier Destriau: So it gives us a lot of flexibility to potentially downside if the market was to turn to the negative or to continue as this and even expand, if we were to see that as a preferred option. But those 35 ships will present about 3040,000 TUs, so from 80000 TUs at your end, we could end up, if we had to downside, closer to 650 by the end of 2000. 25. And with respect to your last question on the down payment for the 8 shifts that are yet to be delivered, we now expect two of the remaining 8,000 TUS shifts and the six of the, sorry, the opposite, by the way, let me just double-check here quickly.

Speaker Change: So it gives us a lot of flexibility to potentially downsize if the market was to turn to the negative or to continue as is and even expand if we were to see that as a preferred strategy.

Omar Nokta: Future. Okay, thank you. Interesting. And I guess, you know, maybe big picture, obviously, on pre-cash flow. In 2024, it turned out to be much stronger than you initially, and we all initially expected. And pre-cash flow has now turned positive quite meaningfully. How do you think about the uses of this excess cash flow that you're now bringing in into them, you know, whether it's strategically or with respect to the balance sheet, any thoughts you can give on the uses of that additional pre-cash?

Speaker Change: But those 35 ships represent about 830,000-140,000 TUs, so from 800,000 TUs at year-end, we could end up, if we had to downsize, closer to 650,000 by the end of 2025.

Speaker Change: And with respect to your last question on the down payment for the 8 ships that are yet to be delivered, we now expect 2 of the remaining 8,000 TU ships and 6 of the 8,000

Eliyahu Glickman: We believe there continues to be value in investing in companies developing destructive technologies, complement complementary to our coal-shipping business as potential growth engine.

Omar Nokta: Look, I think the first comment that I would want to make is that we are very happy and very pleased with the, you know, how the quarter is determined out of the outfit that we might drop out of the year. So continuing to strengthen, as in the day, the balance sheet of the company and the more the balance sheet and the capital structure is strong, the more opportunities we have in terms of capital allocation.

Speaker Change: I'm sorry, I think it's the opposite, by the way. Let me just double check quickly.

Sathish Sivakumar: Yes, we; sorry, we expect six 8,000 TUS shifts. And two, of the smaller 5,000 TUS, the source, we only have down payment commitments for the 8,000 TUS shifts. So those, those are six, the source, 20 million dot each. We represent only the 20 million dollars between now and the end of the year. Okay, thank you. You mentioned about, like, the very levels would determine whether you want to remove them. So just to clarify, so you, it's mainly the freight rates rather than the charter rates, right? Or, sorry, I guess the two are somewhat linked. If we are in a situation where the charter environment continues to be elevated, yes, that's a translation of there is a deal of shortage of capacity, and the shortage of capacity is normally a good factor to sustain a limited freight rate.

Speaker Change: We expect six 8000TU ships and two of the smaller 5000TU vessels. We only have down payment commitment for the 8000TU ships. Those are six vessels, $20 million each. We represent 120 countries.

Eliyahu Glickman: We recently added two very interesting companies to our portfolio. The first carbon blue offers investment in a climate-related technology, which participated in the seed funding round, alongside other financial and strategic investors. Carbon Blue develops ground-breaking water-based carbon dioxide removal technology that is unique in its ability to utilize any type of water in its environmentally friendly process. As such, carbon blue's technology has the potential to convert any existing water infrastructure into an asset curveable of removing CO2, or any water source, frame the water up to absorb most CO2 from the atmosphere.

Eliyahu Glickman: The second investment is in peak commerce, the startup developing and innovative robotic grasping technology, peak commerce solution, combines advanced robotics and artificial intelligence to transform how logistic centers and warehouses handled packaging processes, overcoming the difficulty robots have in identifying items with different ways of shape. Peak commerce unique solution enhance efficiency, reduce operational cost, and ensure accuracy setting new standards in the logistic industry.

Omar Nokta: So I think in terms of prioritization, we will continue to make sure that we allocate capital to our assets, vessels and containers. We will continue to legitimize the fleet of containers that we operate. For the vessel perspective, we need a significant completion, we are completing our significant transformation that was initiated back in 2021-22, so maybe there's a rush of that front. And, importantly, I think we want to continue to return capital to shareholders.

Speaker Change: He led the way in the field, cutting down the divisions between now and the end of the year.

Speaker Change: Okay, thank you. You mentioned about like the rate levels would determine whether you wanted to renew them. So just to clarify, so it's mainly about the freight rates rather than the charter rates, right?

Eliyahu Glickman: As we previously indicated, while this is investment or small, they are consistent with our organizational culture, which promotes a natural innovation in creativity.

Eliyahu Glickman: We are proud to have these companies address critical market needs and fulfil their potential as active strategic investors.

Speaker Change: For UNESCO.

Speaker Change: I guess the two are somewhat linked. If we are in a situation where the charter environment continues to be elevated, I guess that's a...

Xavier Destriau: Xavier, please.

Omar Nokta: So we've done so since the IPO, and we've consistently bi-bio-occupied the policy in terms of paying to our shareholders, and we tend to continue to do so as well in the foreseeable future. Got it. Thank you. And then just maybe a final one for me and a follow-up to just the last one on the dividends. Obviously, you paid another, or you declared a 30% payout for this quarter, just second one this year, and presumably another one significantly is coming in the third quarter.

Speaker Change: translation of there is a shortage of capacity and the shortage of capacity is normally a good factor to sustain elevated free rates.

Xavier Destriau: So if we are to be in this environment, we might want to take some charter in order to continue to capture this good market condition. What I think we will, we will be very mindful about at that time. If we were to be opportunistic, bearing in mind that the long term view or the long term view still points towards potential significant over capacity, we would want to limit commitment in terms of charter duration to show the short term charter. So I think the arbitrage will be on the duration, and if we decide to reach out to some of the capacity, if the rate at the charter rate are perceived elevated, we would not want to lock ourselves for long period, but potentially reach out on an ongoing basis for as long as we see the freight as a demand supporting this type of commitment.

Speaker Change: So if we are to be in this environment, we might want nevertheless to take some charter in order to continue to capture.

Xavier Destriau: Thank you, and again welcome everyone.

Xavier Destriau: On slide 8, we present key financial and operational highlights.

Xavier Destriau: Our second co-author financial results are indicative of continued market strengths based on innovative freightways and strong demand.

Xavier Destriau: Our second co-author average freightways to TU was $1,674.

Speaker Change: these good market conditions.

Speaker Change: What I think we will be very mindful about at that time, if we were to be opportunistic, bearing in mind that the long-term view or the longer-term view still points towards

Xavier Destriau: The 40% year-over-year increase and 15% increase from the prior quarter.

Omar Nokta: How do you think, or perhaps maybe the board viewing the potential of the full 50% year end? I know it's obviously at the discretion of the board, but do you think it's as simple as if the market remains above long-term averages than 50% is realistic, or do you think there's a mindset to prefer to hold on to the excess cash? I'm given maybe the uncertainty, and as you highlighted the order book or the deliveries of the capacity is outpacing demand growth.

Speaker Change: a potential significant overcapacity. We will want to limit our commitment in terms of charter duration to a shorter charter.

Xavier Destriau: During the first six months of the year, our average freightways to TU of $1,569 was 22% higher than in the first half of 2000, at 23.

Speaker Change: So I think the arbitrage will be on the duration and if we decide to recharge some of the capacity. If the rates, the charging rates are perceived elevated, we would not want to lock ourselves for a long period.

Xavier Destriau: At the same time, we continue to see the positive impact on carry volumes, as Eliy just mentioned, our Q2 carry quantities of 952,000Qs was erected, an 11% higher year-over-year.

Xavier Destriau: ZIM growth compared February to market growth of 6%.

Omar Nokta: How are you thinking about that in terms of that true up to 50% is it? I guess I'm trying to ask, is the mentality of the company to hold on to cash, or pay it out if the market remains firm? Any colleague can give there. Look, I think maybe today is a little bit early for us to give a clear answer to that question. I think the board and the company will closely look when the times come, and that will be as far as the potential to work towards next year.

Speaker Change: but potentially reach out on an ongoing basis for as long as we see the freight and the demand supporting this type of commitment.

Xavier Destriau: Revenue from not-contenerized cargo, which reflects mostly our car carrier services, totaled $128 million for the quarter, compared to $136 million in the second quarter of 2023.

Sathish Sivakumar: Thank you, thank you.

Nils Thomason: Your next question comes from a line of Nils Thomason from Family Securities. Your line is open. Hi, thanks for taking my question. It's just so we understand you correctly. I think you alluded that freight rates will be higher in Q3 and then they will trend downwards in Q4, and that's what's baked into your guidance. But can you tell us something what you expect in terms of the container demand? Do you expect a normalization of the year-on-year growth that we've seen so far towards the end of the year, or is that based on a continued growth in the containers throughput throughout the year?

Speaker Change: Thank you. Thanks.

Xavier Destriau: Total revenue in the first half of 2024, $3.5 million were up, $811 million, or 30% year-over-year.

Xavier Destriau: Our free cash flow in the second quarter totaled $712 million, compared to $321 million in the second quarter of 2023.

Speaker Change: Your next question comes from a line of Nils Thomasson from Firmly Securities. Your line is open.

Xavier Destriau: And turning now to the balance sheet, total debt increased by $585 million since prior year-end, mainly due to the net effect on the incoming of larger vessels with longer term charted duration attached.

Speaker Change #100: Hi, thanks for taking my question.

Nils Thomasson: So we understand you correctly. I think you alluded that freight rates will be higher in Q3 and then they will trend downwards in Q4 and that's what's baked into your guidance, but

Xavier Destriau: Turning to our fleet, we currently operate 148 vessels, including 132 containerships, with total capacity of approximately $765,000Qs, as well as 16 car tires.

Omar Nokta: What do we think the following years will look like? Where will we be at an industry in terms of going back to a more normal way of operating and the Red Sea disruption today are blurring a little bit the perception of what do you know what they look like? I think this question will be obviously very much of the agenda at the time, and the answer will be very much the function of what we have delivered on the full year basis in 2024 to start with, but also as important how do we project our film in the coming years depending on where the market dynamics and the big when we make that consideration again towards more. Thank you. Yeah, understood. That makes a lot of sense and appreciate you giving that framework. That's it for me. Thanks, guys.

Speaker Change #102: Can you tell us something, what do you expect in terms of the container demand? Do you expect a normalization of the year-on-year growth that we've seen so far towards the end of the year, or is that based on a continued growth in the containerized throughput throughout the year?

Xavier Destriau: This compares to the overall fleet of 147 vessels, as of our prior earnings goal in May. The change from three months ago resulted from the delivery of eight new builds and the re-delivery of seven vessels.

Eliyahu Glickman: Look, I think we believe that 2024 overall, in terms of a growth in demand, will be better than what we initially planned when we entered into 2024. So clearly we are stronger from start of the year. We talked about maybe this is because in the second quarter we had a little bit of an early peak season, in which case some of the volume that would have been expected to occur later in the year may have been a little bit front loaded. What we think is that the second half should be okay from the overall demand perspective. What we are monitoring, obviously, is the inventory level in the U.S.

Xavier Destriau: However, it is worth noting again that why we continue to operate a similar number of vessels, our operating capacity continues to grow, and this is the result of them replacing the smaller less-cost effective tonnage with larger, more cost-efficient new-wheel capacity. As of today's call 38th of the 46th new-wheel vessels team as committees do, have joined our fleet, including all 10,000 T-U energy vessels, 4,000 T-U vessels, 12 of the 8,000 T-U energy vessels, and 12 of the smaller, one with 5,500 and 5,300 T-U ships.

Speaker Change #102: Look, I think we believe that 2024 overall in terms of

Speaker Change #102: a growth in demand will be better than what we initially planned when we entered into 2024. So clearly we are in a stronger

Speaker Change #103: from the start of the year. We talked about maybe this is because in the second quarter we had a little bit of an early peak season, in which case some of the volume that would have been expected to come later in the year may have been a little bit front-loaded. What we think is still the second half should be okay from an overall demand perspective. What we are monitoring is the inventory level in the US, and if that was to pick up meaningfully, then I would suggest that maybe the underlying demand is not as strong. But today, although those inventories have started to pick up from

Xavier Destriau: Excluding the new-wheel capacity, the average remaining duration of our childhood tonnage continues to trend out, and is now 18 months compared to 19.7 months in late May.

Sathish Sivakumar: Your next question comes from a line of Sathish Sivakumar from City. Your line is open. Thanks, Xavier. Thank you. I've got three questions here. Maybe just to start off with on the tax rate. If you look at it and go to two, you are up less to million, how shall we think about going forward into quarter three and quarter four? I may be for the full year in terms of the tax charges on the PNL.

Eliyahu Glickman: And if that was to a pick up meaningfully, then I would suggest that maybe the underlying demand is not as strong. But today, although those inventories have started to pick up from the lower levels of earlier this year, there are still not yet at the alarming level. So it will very much be a function of whether the demand continues to be okay. That will ... Potentially leads to a race continuing of sliding or reducing at a lower pace. That will really much be a function.

Sathish Sivakumar: And then the second one is around the vessels that are coming up for renewal. So you got about 51 vessels that are coming up for renewal, including 24 and 25. Given whether it's our trade, would you still be interested in giving those vessels back, or would you look to renew them? And then the third one, you did slide that in the cashflow bridge where you pointed about 380 million down payments for 10 LNG vessels and also payment for five vessels.

Speaker Change #103: from lower levels earlier this year. They are still not yet at alarming levels. So it will very much be a function of whether the demand continues to be okay, that will

Xavier Destriau: We have a total of 15 vessels up for charter renewal in the reminder of 2024, as compared to the expected delivery of eight new builds during this period.

Speaker Change #103: potentially lead to rates continuing or sliding or reducing at a lower pace.

Eliyahu Glickman: This is why it's very difficult to forecast the force holds because the two will be most probably linked. In terms of capacity, there is no supply to be expected here. We assume that the race in disruption continues towards the second half. Then the new bill of storage that is going to be delivered in terms of overall T. equivalent is known. So the known is to which extent the demand will soften in the second half compared to the first. But today we don't have any clear allow single that the demand in the second half would collapse.

Speaker Change #103: That will really much be a function. This is why it's very difficult to forecast the fourth quarter because the two will be most probably linked. In terms of capacity, there is no surprise to be expected here.

Sathish Sivakumar: Or actually think about for the remaining eight vessels. And do you expect to take another debt service charge in the coming quarters, or will be mostly in 25? Yeah, thank you. Thank you, Xavier. I'll try to take your question, whatever the other.

Speaker Change #104: If we assume that the Red Sea disruption continues towards the second half, then the new bill of tonnage that is going to be delivered in terms of overall TU equivalent is known. So the unknown is to which extent the demand will soften in the second half compared to the first.

Xavier Destriau: So the first one, we'll respect to tax rates for the full year of 2024. We don't expect to interest significant tax charge in 2024, as we will still be able to benefit in the way from the taxes that we generated in 2023. And that we can carry forward in front of the profits that we are making or expect to make in 2024. We should not expect a significant tax charge in our early PNL.

Speaker Change #104: But today we don't have any clear alarm signals that the demand in the second half would collapse.

Elana Holzman: Okay, thank you. And this concludes our question-and-answer session.

Speaker Change #104: Okay, thank you.

Eliyahu Glickman: I will now turn the call back over to Elie Glickman, ZIM President and CEO, for closing remarks. Thank you. We are very pleased to report strong Q2 financial and operational results today. This performance illustrates ZIM's continued success in advancing our fleet transformation, our commercial agility, and outstanding execution while capitalizing on a rate environment that has remained stronger for longer than anticipated. We are confident the steps we have taken to enhance our operational and commercial resilience will continue to drive long-term sustainable goals. As we look towards remainder 24, we increase our full list guidance and now believe that backup of 24 will be stronger as compared to the first half.

Speaker Change #104: and this concludes our question and answer session. I will now turn the call back over to Eli Glickman, ZIM President and CEO for closing remarks.

Xavier Destriau: Next, moving on to slide 10, we present ZIM's second quarter and six of 2024 financial results compared to last year's Q2 and first half. Adjusted EBITDA in this year's second quarter was $766M and adjusted EBIT was $488M. Adjusted EBITDA and EBIT margin for the second quarter were 40% and 25% respectively, as compared to 21% and negative 11% in the second quarter of last year.

Speaker Change #105: Thank you. We are very pleased to report strong Q2 financial and operational results today.

Xavier Destriau: With respect to the vessel, the fleet plan, clearly when it comes to 2024, we intend to continue to execute on the strategy that we laid out already a few quarters back, which is the re-delivering or the vessels that come up from renewal. And those are smaller vessels, somewhat expensive capacity as well, that will secure in the times of the COVID era days, not during which the charging rates were at elevated levels.

Eli Glickman: This performance illustrates ZIM's continued success in advancing our fleet transformation, our commercial agility, and outstanding execution while capitalizing on a rate environment that has remained stronger for longer than anticipated.

Eli Glickman: We are confident the steps we have taken to enhance our operational and commercial resilience will continue to drive long-term sustainable growth.

Xavier Destriau: For the first six months of 2024, adjusted EBITDA margin was 34% and adjusted EBIT margin was 19%. This is compared to 24% and a negative 6% in 2023.

Xavier Destriau: And we continue to need to make room for these new ships that are yet to be delivered. These eight ships that are coming between now and the end of the year. And as I was saying, also very wrong, by doing just that, we will continue to increase our operating capacity from 70050 of the TU today to 80000 TU by the end of the year.

Eli Glickman: i

Xavier Destriau: Net income in the second quarter was $373 billion compared to a net loss of $230 billion in the same quarter of last year.

Eli Glickman: As we look towards the remainder of 2024, we increase our full-year guidance and now believe that the back half of 2024 will be stronger as compared to the first half.

Eliyahu Glickman: In the second quarter, we achieve record carried volume as a direct result of ZIM's strategic decision to upscales and modernize our fleet. And we expect to continue to see incremental benefits as new, larger, cost-effective vessels join the fleet. We are committed to further implementing our differentiated strategy, best serving our loyal customer and maximizing value for all our stakeholders. Thank you again for joining us today. We look forward to sharing with you our continued progress.

Xavier Destriau: Turning now to slide 11, we present our Carried Volumes, Broken Out by Trace Loops, attributable to our larger capacity vessels and also to new lines.

Xavier Destriau: Trans-Pacific and Latin America volumes grew 29% and 90% respectively year-over-year. We expect to see continued volume growth during the remainder of 2024 as we continue to upsize our capacity and remain on track to achieve our double-digit volume growth target.

Xavier Destriau: On slide 12 is our cash flow bridge, so for the quarter, our adjusted EBITDA of $766 million converted into $777 million of cash flow generated from operating activities. Other cash flow significant item for the quarter is the 598 million dollars of debt service mostly related to our lease liability repayment.

Xavier Destriau: In Q2, we paid $73 million as down payment on the delivery of our LG.

Xavier Destriau: Moving now to our 2024 guidance, as you already heard from Eli, our outlook for the remainder of 2024 is now significantly stronger than previously assumed, with the second half of 2024 now expected to be better than the first. Adjusted EBIT between $1.45 billion and $1.85 billion. Our improved guidance is driven almost entirely by the strengths we are seeing in sport racing, which we now expect will continue at least through the third quarter.

Eli Glickman: In the second quarter, we achieved record carried volume as a direct result of ZIM's strategic decision to upscale and modernize our fleet.

Xavier Destriau: This, in turn, contributed to a higher freight rate assumption incorporated into our current guidance as compared to the freight rate assumptions we did incorporate into the guidance we provided back in, Our volume assumptions for 2024 guidance remain unchanged and we continue to expect to achieve double-digit volume growth in 2024 versus 2023. This is consistent with the assumptions driving our initial guidance in architecture.

Xavier Destriau: Our Safe Renewal Program continues to give us very good visibility into our cost strategies.

Xavier Destriau: And as we redeliver chartered capacity at Bland, and we see that you will be secured in 2021 and 2022.

Xavier Destriau: As previously indicated, we did not need to turn to the charter market to secure additional tonnage to address the rates crisis. And therefore, our 2024 results are not impacted by the elevated rates currently observed in the charter market.

Xavier Destriau: Our worker cost assumptions are largely unchanged in our current guidance as compared to the underlying assumptions, for the guidance we provide here.

Xavier Destriau: Moving to some data points which we believe underscore our expectations for the remainder of 2020. The underlying supply-demand balance for the near-term and mid-term has been and remains one of significant oversupply. Yet, as you all know, security concerns over safe transit through the Arafat and Straits of Bab-el-Mande have dramatically changed this reality into a certain equilibrium, as extended voyage durations around the Cape of Good Hope have absorbed significant nominal capacity. From May onwards, congestion mostly in Asian and West Med ports, along with equipment constraints, put additional pressure on the global supply chain.

Xavier Destriau: You can see the continued upward trend in the Ocean Stability Indicator, or OTI, on the right. To remind you, the OTI measures the journey of a container from the time it is set to leave the factory to the time it is picked up from its destination port. These longer journeys on the main deep-sea trade point to added pressure on the supply side.

Xavier Destriau: And the outcome of this pressure is evident in the next slide, where we show the spot rate development in four regional trades in which we operate. We first saw signs of this rate improvement in May, when a second wave of spot rate increases began and spilled over to trade not directly impacted by the risky crisis. Nevertheless, the magnitude of the increases we have seen was still unforeseen.

Xavier Destriau: At this point in time, though we've witnessed the SCFI decline since its mid-July peak, these declines are not unexpected as new vessel deliveries continue, particularly of large-capacity vessels.

Xavier Destriau: Then it comes to 2025. And then we do not have any new bills delivered expected, but we have indeed the 36 ships that will cover for renewal in 2025. And we will need to make the determination as to whether we want to reach after a sum of all of these capacity to continue to operate on the 80000 TU equivalent voltage on it, depending on where the market will be in 2025 and mostly basis, when we have to make the decision to let go of the ship or to potentially seek rechartering of the capacity.

Xavier Destriau: Allegating the pressure on, Now on the demand side, we also saw in May an uptick in demand, which compounded with the supply pressure and contributed to the magnitude of the spot rate increases we've experienced.

Eli Glickman: And we expect to continue to see incremental benefits as new, larger, cost-effective vessels join the fleet.

Xavier Destriau: Container volumes from Asia to the US, our main trade, have been strong in the first half of the year.

Xavier Destriau: Yet there is still question as to whether the strength in demand we are witnessing is a pull forward in peak season demand, or longer term, more sustainable at peak season demand.

Xavier Destriau: In addition, we have another 36 vessels up for renewal in 2025.

Xavier Destriau: While this has been and still is a positive peak season, the build-up in inventory levels in the US, which you can see on the right, suggests that we will likely see no more seasonality trends.

Xavier Destriau: The uncertainty with respect to the race environment for Q4 remains high, with the duration of the resty crisis a critical unknown.

Xavier Destriau: While a less likely scenario in the short term, if the Red Sea crisis ends and sailing through the Suez Canal is used, oversupply will likely put significant pressure on rail.

Xavier Destriau: On the other hand, as long as significant supply remains tied up in the extended voyages around the Cape, rates are still likely to continue to slide at a slower pace given the added capacity and typical seasonality.

Eli Glickman: We are committed to further implementing our differentiated strategy, best serving our loyal customers, and maximizing value for all our stakeholders.

Xavier Destriau: That's what you see highlighted.

Xavier Destriau: Thank you, and on that note, we will open the call to your questions.

Operator: Thank you.

Operator: We will now begin the question and answer session.

Operator: If you would like to ask a question, please press star 1 in your telephone keypad to raise your hand and join the queue.

Operator: If you would like to withdraw your question, simply press star 1 again.

Eli Glickman: Thank you again for joining us today. We look forward to sharing with you our continued progress.

Operator: Your first question comes from the line of Omar Nokta from Jeffreys.

Omar Nokta: Your line is open, you.

Omar Nokta: Hi, Eli and Xavier.

Omar Nokta: Good afternoon.

Operator: This concludes today's conference call. Thank you for your participation.

Operator: This concludes today's conference call.

Omar Nokta: Congrats on a obviously very, very strong quarter and a big guidance revision for the year.

Operator: Thank you for your participation.

Omar Nokta: You know, nice to see double-digit growth in the volumes, but also at the same time to see that in the freight rates, which many times that doesn't go hand in hand.

Operator: You may now disconnect.

Omar Nokta: I wanted to ask, I have a couple of questions, but just wanted to ask on the volumes.

Operator: You may now disconnect.

Omar Nokta: You've highlighted, you know, several times in your comments about your target of double-digit growth for the full year.

Omar Nokta: The figure for the second quarter of 952,000 TEUs is obviously a big jump and a gap up from what you've done over the past several quarters. I know you've taken delivery of some bigger shifts, and so that's helped.

Speaker Change #107: This concludes today's conference call. Thank you for your participation. You may now disconnect.

Omar Nokta: But just as we think about volumes going forward, do you think this level is a new maybe baseline or run rate for ZIM?

Omar Nokta: And is there any color you can give us on the third quarter and how these volumes have fared thus far?

Omar Nokta: Yes, Omar, it's a good question and the short answer is that we basically hope so.

Omar Nokta: Clearly, as we've been upgrading and upsizing our capacity, we keep on increasing our operative tonnage.

Omar Nokta: Today, we operate and even take 750,000 TEUs. By the end of the year, when we will have received the remaining H-sheets that are yet to be delivered and when we return 15 smaller vessels, we will end up operating an equivalent capacity close to 800,000 TEUs.

Omar Nokta: So, for us to clearly benefit from the lower cost per TEU carried, we need to make sure that at the same time, we increase the volume that we end up carrying. So, we set a new record this quarter with 952,000 TEUs.

Omar Nokta: We expect to continue to grow quarter after quarter and reach 1 million TEUs per quarter in the not-so-distant future.

Omar Nokta: Okay, thank you.

Omar Nokta: Interesting.

Omar Nokta: And I guess, you know, maybe big picture, obviously, on free cash flow, 2024 has turned out to be much stronger than you initially, than we all initially expected. And free cash flow has now turned positive quite meaningfully.

Omar Nokta: How do you think about the uses of this excess cash flow that you're now bringing in into ZIM, you know, whether strategically or respect to the balance sheet, any thoughts you can give on the uses of that additional free cash?

Omar Nokta: Look, I think the first comment that I would want to make is that we are very happy and very pleased with the, you know, how the quarter did turn out and the outlook for the remainder of the year.

Omar Nokta: So continuing to strengthen, at the end of the day, the balance sheet of the company. And the more the balance sheet and the capital structure is strong, the more opportunities we have in terms of capital allocation.

Omar Nokta: So I think in terms of a prioritization, we will continue to make sure that we allocate capital to our assets, vessels and containers. We will continue to rejuvenate the fleet of containers that we operate.

Xavier Destriau: This gives us ample flexibility to ensure our fleet size matches the market opportunity.

Xavier Destriau: And to be frank, that we would be very much a function of where the market is in terms of rate environment, where are we in terms of the congestion that we experience over the past few quarters, where are we in terms of supply demand dynamics. So it gives us a lot of flexibility to potentially downside if the market was to turn to the negative or to continue as this and even expand, if we were to see that as a preferred option.

Omar Nokta: From a vessel perspective, we need a significant completion, we are completing our significant transformation that was initiated back in 2021-22, so maybe less rush on that front.

Omar Nokta: And as importantly, I think we want to continue to return capital to shareholders. So we've done so since the IPO, and we've been consistently advised by our dividend policy in terms of dividends paid to our shareholders, and we intend to continue to do so as well in the foreseeable future.

Omar Nokta: Got it.

Omar Nokta: Thank you.

Omar Nokta: And then just maybe a final one for me and a follow-up to just the last one on the dividends.

Omar Nokta: Obviously, you've paid another or you've declared a 30 percent payout for this quarter.

Omar Nokta: It's your second one this year and presumably another one significantly is coming in the third quarter.

Omar Nokta: How do you think or how is perhaps the board viewing the potential of the of the full 50 percent at year end?

Omar Nokta: I know it's obviously at the discretion of the board, but do you think it's as simple as if the market remains above long term averages, then 50 percent is realistic?

Omar Nokta: Or do you think or is the mindset to prefer to hold on to the excess cash given maybe the uncertainty?

Omar Nokta: And as you highlighted, the order book or the deliveries of the capacity is outpacing demand growth.

Omar Nokta: How are you thinking about that in terms of that true up to 50 percent?

Omar Nokta: Is it is I guess I'm trying to ask, is the mentality of the company to hold on to cash or pay it out?

Omar Nokta: If the market remains firm, any any color you can give there.

Omar Nokta: Look, I think maybe today is a little bit early for us to give a clear answer to that question.

Omar Nokta: I think the board and the company will closely look when the time has come and that will be as far as the potential tour towards March next year.

Omar Nokta: What do we think the following years will look like?

Xavier Destriau: But those 35 ships will present about 3040,000 TUs so from 80000 TUs at your end, we could end up if we had to downside closer to 650 by the end of 2000. 25. And with respect to your last question on the down payment for the 8 shifts that are yet to be delivered, we now expect two of the remaining 8,000 TUS shifts and the six of the, sorry, the opposite by the way, let me just double-check here quickly.

Omar Nokta: Where will we be as an industry in terms of maybe going back to a more normal way of operating?

Omar Nokta: The Red Sea disruptions today are blurring a little bit the perception of what the new normal may look like.

Omar Nokta: So I think this question will be obviously very much on the agenda at the time and the answer will be very much a function of what will we have delivered on a full year basis in 2024 to start with, but also as importantly how do we project ourselves in the coming years depending on where the market dynamics end up being when we make that consideration again towards March.

Omar Nokta: Yeah, understood.

Omar Nokta: That makes a lot of sense and I appreciate you giving that framework.

Omar Nokta: That's it for me.

Omar Nokta: Thanks, guys.

Operator: Your next question comes from the line of Sathish Sivakumar from Citi.

Sathish Sivakumar: Your line is open.

Sathish Sivakumar: Thanks, Eli.

Sathish Sivakumar: I've got three questions here, maybe just to start off with on the tax rate.

Sathish Sivakumar: If you look at in Q2, you had a plus 2 million.

Sathish Sivakumar: How should we think about going forward in Q3 and Q4, maybe for the full year, in terms of the tax charges on the P&L?

Sathish Sivakumar: And then the second one is around the vessels that are coming up for renewal.

Sathish Sivakumar: So you got about 51 vessels that are coming up for renewal, including 24 and 25.

Sathish Sivakumar: Given weather rates are today, would you still be interested in like giving those vessels back or would you look to renew them?

Sathish Sivakumar: And then the third one, you did add a slide there in the cash flow bridge where you pointed about 380 million down payments for 10 LNG vessels and also payment for 5 vessels.

Sathish Sivakumar: How should we think about for the remaining 8 vessels and do you expect to take another debt service charge in the coming quarters or it will be mostly in 2025?

Sathish Sivakumar: Yeah, thank you.

Sathish Sivakumar: Thank you, Sathish.

Sathish Sivakumar: I'll try to take your questions one after the other.

Sathish Sivakumar: So, the first one with respect to tax rates for the full 2024. We don't expect to incur a significant tax charge in 2024, as we will still be able to benefit, in a way, from the tax losses that we generated in 2023, and that we can carry forward in front of the profits that we are making or expect to make in 2024. So you should not expect a significant tax charge in our yearly P&L.

Sathish Sivakumar: With respect to the vessel, the fleet plan, clearly when it comes to 2024, we intend to continue to execute on the strategy that we laid out already a few quarters back, which is re-delivering the vessels that come up for renewal.

Sathish Sivakumar: Those are smaller vessels, somewhat expensive capacity as well that was secured in the times of the COVID era days, during which the chartering rates were at elevated levels, and we continue to need to make room for these new ships that are yet to be delivered, the eight ships that are coming between now and the end of the year.

Sathish Sivakumar: And as I was saying also earlier on, by doing just that, we will continue to increase our capacity from 750,000 TUs today to 800,000 TUs by the end of the year. Then comes 2025, and then we do not have any new build delivery expected, but we have indeed 36 ships that will come up for renewal in 2025, and we will need to make the determination as to whether we want to re-charter some or all of this capacity to continue to operate on the 800,000 TU equivalent tonnage, or less, depending on where the market will be in 2025, on a monthly basis, when we have to make the decision to let go of the ship or to potentially seek re-chartering of the capacity.

Sathish Sivakumar: And to be frank, that will be very much a function of where the market is in terms of rate environment, where are we in terms of the congestion that we've experienced over the past few quarters, where are we in terms of supply-demand dynamics.

Sathish Sivakumar: So it gives us a lot of flexibility to potentially downsize if the market was to turn to the negative, or to continue as is and even expand if we were to see that as a preferred option.

Sathish Sivakumar: But those 35 ships represent either 830,000 or 840,000 TUs, so for 800,000 TUs at year-end, we could end up, if we had to downsize, closer to 650,000 by the end of 2025.

Sathish Sivakumar: And with respect to your last question on the down payment for the 8 ships that are yet to be delivered, we now expect 2 of the remaining 8,000 TU ships, and 6 of the...

Sathish Sivakumar: Sorry, I think it's the opposite, by the way.

Sathish Sivakumar: Let me just double check here quickly.

Sathish Sivakumar: Yes, sorry, we expect six 8,000TU ships and two of the smaller 5,000TU vessels.

Sathish Sivakumar: We only have down payment commitment for the 8,000TU ships. So those are six vessels, $20 million each.

Sathish Sivakumar: We represent $120 million between now and the end.

Sathish Sivakumar: Thank you.

Sathish Sivakumar: You mentioned about like the rate levels would determine whether you wanted to renew them. So just to clarify, so it's mainly about the freight rates rather than the charter rates, right?

Sathish Sivakumar: for all.

Sathish Sivakumar: I guess, Sathish, the two are somewhat linked. If we are in a situation where the charter environment continues to be elevated, I guess that's a translation of there is still a shortage of capacity, and the shortage of capacity is normally a good factor to sustain elevated freight rates.

Sathish Sivakumar: So, if we are to be in this environment, we might want nevertheless to take some charter in order to continue to capture these good market conditions.

Sathish Sivakumar: What I think we will be very mindful about at that time, if we were to be opportunistic, bearing in mind that the long-term view or the longer-term view still points towards a potential significant overcapacity. We will want to limit our commitment in terms of charter duration to a shorter charter.

Sathish Sivakumar: So, I think the arbitrage will be on the duration, and if we decide to recharter some of the capacity, if the rates, the charter rates are perceived elevated, we would not want to lock ourselves for a long period, but potentially recharter on an ongoing basis for as long as we see the freight and the demand supporting this type of activity.

Sathish Sivakumar: Thank you.

Operator: Your next question comes from a line of Nils Thomasson from Firmly Securities.

Nils Thomasson: Your line is open.

Nils Thomasson: Hi, thanks for taking my question, it's just...

Nils Thomasson: So we understand you correctly.

Nils Thomasson: I think you alluded that freight rates will be higher in Q3, and then they will trend downwards in Q4, and that's what's baked into your guidance.

Nils Thomasson: But can you tell us something, what you expect in terms of the container demand?

Nils Thomasson: Do you expect a normalization of the year-on-year growth that we've seen so far towards the end of the year, or is that based on a continued growth in the containerized throughput throughout the year?

Nils Thomasson: Look, I think we believe that 2024 overall in terms of growth in demand will be better than what we initially planned when we entered into 2024.

Nils Thomasson: So clearly we are in a strong start of the year. We talked about maybe this is because in the second quarter we had a little bit of an early peak season, in which case some of the volume that would have been expected to come later in the year may have been a little bit front-loaded.

Nils Thomasson: What we think is still the second half should be okay from an overall demand perspective.

Nils Thomasson: What we are monitoring obviously is the inventory level in the US, and if that was to pick up meaningfully, then that would suggest that maybe the underlying demand is not as strong. But today, although those inventories have started to pick up from lower levels earlier this year, they are still not yet at alarming levels.

Xavier Destriau: Yes, we, sorry, we expect six 8,000 TUS shifts. And two, of the smaller 5,000 TUS, the source, we only have down payment commitments for the 8,000 TUS shifts, so those, those are six, the source, 20 million dot each, we represent only the 20 million dollars between now and the end of the year. Okay, thank you. You mentioned about, like, the very levels would determine whether you want to remove them. So just to clarify, so you, it's mainly the freight rates rather than the charter rates, right?

Nils Thomasson: So it will very much be a function of whether the demand continues to be okay, potentially lead to rates continuing or sliding or reducing at a lower pace.

Nils Thomasson: That will really much be a function.

Nils Thomasson: This is why it's very difficult to forecast the fourth quarter because the two will be most probably linked.

Nils Thomasson: In terms of capacity, there is no surprise to be expected here.

Nils Thomasson: If we assume that the Red Sea disruption continues towards the second half, then the new build tonnage that is going to be delivered in terms of overall TU equivalent is known. The unknown is to which extent the demand will soften in the second half compared to the first.

Nils Thomasson: But today, we don't have any clear alarm signals that the demand in the second half would, Okay, thank you.

Operator: And this concludes our question and answer session.

Eliyahu Glickman: I will now turn the call back over to Eliyahu Glickman, ZIM President and CEO for closing remarks.

Eliyahu Glickman: Thank you.

Eliyahu Glickman: We are very pleased to report strong Q2 financial and operational results today. This performance illustrates ZIM's continued success in advancing our fleet transformation, our commercial agility, and our innovation, and Outstanding Execution while capitalizing on a rate environment that has remained stronger for longer than anticipated.

Eliyahu Glickman: We are confident the steps we have taken to enhance our operational and commercial resilience will continue to drive long-term sustainable growth.

Eliyahu Glickman: As we look towards the remainder of 2020, We increase our full year guidance and now believe that back half of 24 will be stronger as compared to the first half. In the second quarter, we achieved record carried volume as a direct result of ZIM's strategic decision to upscale and modernize our fleet, and we expect to continue to see incremental benefits. As new, larger, cost-effective vessels join the fleet.

Eliyahu Glickman: We are committed to further implementing our differentiated strategy, best serving our loyal customers, and maximizing value for all our stakeholders.

Eliyahu Glickman: Thank you again for joining us today.

Eliyahu Glickman: We look forward to sharing with you our continued progress.

Xavier Destriau: Or, sorry, I guess the two are somewhat linked. If we are in a situation where the charter environment continues to be elevated, yes, that's a translation of there is a deal of shortage of capacity and the shortage of capacity is normally a good factor to sustain a limited freight rate. So if we are to be in this environment, we might want to take some charter in order to continue to capture this good market condition.

Xavier Destriau: What I think we will, we will be very mindful about at that time, if we were to be opportunistic, bearing in mind that the long term view or the long term view still points towards potential significant over capacity, we would want to limit commitment in terms of charter duration to show the short term charter. So I think the arbitrage will be on the duration and if we decide to reach out to some of the capacity, if the rate at the charter rate are perceived elevated, we would not want to lock ourselves for long period, but potentially reach out on an ongoing basis for as long as we see the freight as a demand supporting this type of commitment. Thank you, thank you.

Nils Thomason: Your next question comes from a line of Nils Thomason from Family Securities. Your line is open. Hi, thanks for taking my question.

Eliyahu Glickman: It's just so we understand you correctly. I think you alluded that freight rates will be higher in Q3 and then they will trend downwards in Q4 and that's what's baked into your guidance. But can you tell us something what you expect in terms of the container demand, do you expect a normalization of the year and year growth that we've seen so far towards the end of the year or is that based on a continued growth in the containers throughput throughout the year.

Xavier Destriau: Next, moving on to slide 10, we present ZIM's second quarter and six months to 2024 financial results compared to last year's Q2 and first half.

Eliyahu Glickman: Look, I think we believe that 2024 overall in terms of a growth in demand will be better than what we initially planned when we entered into 2024. So clearly we are stronger from start of the year. We talked about maybe this is because in the second quarter we had a little bit of an early peak season in which case some of the volume that would have been expected to occur later in the year may have been a little bit front loaded.

Eliyahu Glickman: What we think is that the second half should be okay from the overall demand perspective what we are monitoring obviously is the inventory level in the U.S. And if that was to a pick up meaningfully, then I would suggest that maybe the underlying demand is not as strong. But today although those inventories have started to pick up from the lower levels of earlier this year, there are still not yet at the alarming level.

Eliyahu Glickman: So it will very much be a function of whether the demand continues to be okay. That will ... Potentially leads to a race continuing of sliding or reducing at a lower pace. That will really much be a function. This is why it's very difficult to forecast the force holds because the two will be most probably linked. In terms of capacity, there is no supply to be expected here. We assume that the race in disruption continues towards the second half.

Eliyahu Glickman: Then the new bill of storage that is going to be delivered in terms of overall T, equivalent is known. So the known is to which extent the demand will soften in the second half compared to the first. But today we don't have any clear allow single that the demand in the second half would collapse.

Elana Holzman: Okay, thank you. And this concludes our question and answer session.

Eliyahu Glickman: I will now turn the call back over to Elie Glickman, ZIM President and CEO for closing remarks. Thank you. We are very pleased to report strong Q2 financial and operational results today. This performance illustrate ZIM continued success in advancing our fleet transformation, our commercial agility and outstanding execution while capitalizing on a rate environment that has remained stronger for longer than anticipated. We are confident the steps we have taken to enhance our operational and commercial resilience will continue to drive long-term sustainable goals.

Xavier Destriau: I just did a bidire in this year's second quarter, what $766 million and I just did a bid was $488 million. I just did a bidire a bid margin for the second quarter where 40% and 25% respectively as compared to 21% and a negative 11% in the second quarter of last year.

Xavier Destriau: For the first six months of 2024, I just did a bidire margin was 34%, and I just did a bidire margin was 19%.

Xavier Destriau: This is compared to 24% of a negative 6% in 2023.

Eliyahu Glickman: As we look towards remainder 24, we increase our full list guidance and now believe that backup of 24 will be stronger as compared to the first half. In the second quarter, we achieve record carried volume as a direct result of ZIM strategic decision to upscales and modernize our fleet. And we expect to continue to see incremental benefits as new larger cost effective vessels join the fleet. We are committed to further implementing our differentiated strategy, best serving our loyal customer and maximizing value for all our stakeholders.

Xavier Destriau: Next income in the second quarter was $373 million compared to a net loss of $230 billion in the same quarter of last year.

Xavier Destriau: We expect to see continued volume growth during the reminder of 2024 as we continue to apply our capacity and we may not try to achieve our double digit volume growth target this year.

Xavier Destriau: On slide 12 is our cash flow bridge.

Elana Holzman: Thank you again for joining us today. We look forward to sharing with you our continued progress. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Xavier Destriau: For the quarter, I just did a bidire of $766 million compared to $777 billion of cash flow generated from operating activities.

Xavier Destriau: Other cash flow significance items for the quarter is $598 million of debt service mostly related to our lease liability repayment.

Xavier Destriau: In Q2, we pay $73 million as down payment on the delivery of our energy vessels.

Xavier Destriau: Our input guidance is that we must almost entirely by the strengths we are seeing in spot rates, which we now expect will continue at least through the third quarter. This in turn contributed to a higher credit assumption incorporated into our current guidance.

Xavier Destriau: As compared to the freight rate assumptions, we did incorporate into the guidance we provided back.

Xavier Destriau: Our volume assumptions for our 2024 guidance remain unchanged and we continue to expect to achieve double digit volume growth in 2024 versus 2023. This is consistent with the assumptions driving our initial guidance in March.

Xavier Destriau: Our thinking new program continues to give us very good visibility into our cost strategy here, and as we deliver childhood capacity at Gland, and we see that you will be secured in 2021 and 2022.

Xavier Destriau: Our worker cost assumptions are lovely and changed in our current guidance as compared to the online assumptions for the guidance we provided it may.

Xavier Destriau: Moving to some data points which we believe on the score are expectations for the reminder of 2024.

Xavier Destriau: The underlying supply demand balance for the near-to-meter has been and remains one of significant oversupply.

Xavier Destriau: Yet, as you all know, security concerns of a safe transit through the RFCs and strengths of the Babel Monday have dramatically changed this reality into asserted equilibrium and extended voice durations around the capable growth have absorbed significant nominal capacity.

Xavier Destriau: From May onwards, congestion mostly in the Asian and West mid-twarts along with equipment constraints puts additional pressure on the global supply chain. You can see the continuous upward trend in the ocean timeliness indicator or OTI on the right. To remind you, the OTI measures the journey on a container from the time it is set to leave the factory to the time it is picked up from its destination port. These longer journeys on the main deep sea trade point to added pressure on the supply side.

Xavier Destriau: And the outcome of this pressure is evident in the next slide where we show the spotlight development in before regional trade in which we operate.

Xavier Destriau: We first saw signs of these trade improvements in May when the second wave of stock rates increases began and spilled over to trade not directly infected by the RFC crisis.

Xavier Destriau: Nevertheless, the magnitude of these increases we have seen was seen.

Xavier Destriau: At this point in time, though we've witnessed the SEFI decline since its mid-July peak, these decline are not unexpected as new vessel deliveries continue, particularly of large capacity metals, alleviating the pressure on supply.

Xavier Destriau: Now, the demand side, we also saw in May a neptic in demand which compounded with the supply pressure and contributed to the magnitude of the spotlight increase with experience.

Xavier Destriau: Container Volumes from Asia to the US, our main trade, have been strong in the first half of the year.

Xavier Destriau: Yet, there is still question as to whether the strength in demand we are witnessing is the full forward in peak season demand, or longer term, more sustainable at the end of the month.

Xavier Destriau: The uncertainty with respect to the rate and environment for Q4 events higher, with the duration of the Red Sea crisis a critical unknown.

Xavier Destriau: While the less likely than are in the short term, if the Red Sea crisis ends and sailing through the Red Canal with use, over-supply we likely put significant pressure on red.

Xavier Destriau: Thank you and on that note, we will open the call to your questions.

Xavier Destriau: Thank you.

Operator: We will now begin the question and answer session.

Operator: If you would like to ask a question, please press star one in your telephone keypad to raise your hand and join the queue.

Operator: If you would like to withdraw your question, simply press star one again.

Omar Nokta: Your first question comes from a line of Omar Nukta from Jeffries.

Omar Nokta: Your line is open.

Omar Nokta: Thank you.

Omar Nokta: Good afternoon.

Omar Nokta: Congrats on a very, very strong quarter and a big guidance revision for the year.

Omar Nokta: Nice to see double-digit growth in the volumes, but also at the same time to see that in the freight rate, which many times doesn't go hand in hand.

Omar Nokta: I wanted to ask, I have a couple of questions, but just wanted to ask on the volumes.

Omar Nokta: You have highlighted several times in your comment about your target of double-digit growth for the full year.

Omar Nokta: The figure for the second quarter of 952,000 TEUs is obviously a big jump in a gap up from what you've done over the past several quarters. I know you've taken delivery of some bigger shifts and so that's helped.

Omar Nokta: But just as we think about volumes going forward, do you think this level is a new maybe baseline or run rate for them?

Omar Nokta: Is there any color you can give us on the third quarter and how these volumes have spared thus far?

Eliyahu Glickman: Yes, all right.

Eliyahu Glickman: It's a good question.

Eliyahu Glickman: And the short answer with we basically hope so clearly as we've been upgrading and exciting our capacity.

Eliyahu Glickman: We keep on increasing our operational storage.

Eliyahu Glickman: There we operate.

Eliyahu Glickman: You don't take a seven hundred and fifty thousand TEUs.

Eliyahu Glickman: By the end of the year, when we will have received the remaining eight sheets that are yet to be delivered.

Eliyahu Glickman: And we've returned 15,000, 15,000 smaller vessels.

Eliyahu Glickman: We will end up operating with equivalent capacity close to eight hundred thousand TEUs.

Eliyahu Glickman: So for us to clearly benefit from the lower cost per TEU carry, we need to make sure that at the same time we increase the volume that we end up carrying.

Eliyahu Glickman: So we set a new record.

Eliyahu Glickman: This water is not 150,000 TEUs.

Eliyahu Glickman: We expect to continue to grow quarter after quarter and reach one million TEU per quarter in the not to disappear.

Eliyahu Glickman: Future.

Omar Nokta: Okay, thank you.

Omar Nokta: Interesting.

Omar Nokta: And I guess, you know, maybe big picture, obviously, on pre-cash flow.

Omar Nokta: In 2024, it turned out to be much stronger than you initially, and we all initially expected.

Omar Nokta: And pre-cash flow has now turned positive quite meaningfully.

Omar Nokta: How do you think about the uses of this excess cash flow that you're now bringing in into them, you know, whether it's strategically or with respect to the balance sheet, any thoughts you can give on the uses of that additional pre-cash?

Eliyahu Glickman: Look, I think the first comment that I would want to make is that we are very happy and very pleased with the, you know, how the quarter is determined out of the outfit that we might drop out of the year.

Eliyahu Glickman: So continuing to strengthen, as in the day, the balance sheet of the company and the more the balance sheet and the capital structure is strong, the more opportunities we have in terms of capital allocation.

Eliyahu Glickman: So I think in terms of prioritization, we will continue to make sure that we allocate capital to our assets, vessels and containers.

Eliyahu Glickman: We will continue to legitimize the fleet of containers that we operate.

Eliyahu Glickman: For the vessel perspective, we need a significant completion, we are completing our significant transformation that was initiated back in 2021-22, so maybe there's a rush of that front.

Eliyahu Glickman: And, importantly, I think we want to continue to return capital to shareholders. So we've done so since the IPO, and we've consistently bi-bio-occupied the policy in terms of paying to our shareholders, and we tend to continue to do so as well in the foreseeable future.

Omar Nokta: Got it.

Omar Nokta: Thank you.

Omar Nokta: And then just maybe a final one for me and a follow-up to just the last one on the dividends.

Omar Nokta: Obviously, you paid another, or you declared a 30% payout for this quarter, just second one this year, and presumably another one significantly is coming in the third quarter.

Omar Nokta: How do you think, or perhaps maybe the board viewing the potential of the full 50% year end?

Omar Nokta: I know it's obviously at the discretion of the board, but do you think it's as simple as if the market remains above long-term averages than 50% is realistic, or do you think there's a mindset to prefer to hold on to the excess cash?

Omar Nokta: I'm given maybe the uncertainty, and as you highlighted the order book or the deliveries of the capacity is outpacing demand growth.

Omar Nokta: How are you thinking about that in terms of that true up to 50% is it?

Omar Nokta: I guess I'm trying to ask, is the mentality of the company to hold on to cash, or pay it out if the market remains firm?

Omar Nokta: Any colleague can give there.

Eliyahu Glickman: Look, I think maybe today is a little bit early for us to give a clear answer to that question.

Eliyahu Glickman: I think the board and the company will closely look when the times come, and that will be as far as the potential to work towards next year.

Eliyahu Glickman: What do we think the following years will look like?

Eliyahu Glickman: Where will we be at an industry in terms of going back to a more normal way of operating and the Red Sea disruption today are blurring a little bit the perception of what do you know what they look like?

Eliyahu Glickman: I think this question will be obviously very much of the agenda at the time, and the answer will be very much the function of what we have delivered on the full year basis in 2024 to start with, but also as important how do we project our film in the coming years depending on where the market dynamics and the big when we make that consideration again towards more.

Omar Nokta: Thank you.

Omar Nokta: Yeah, understood.

Omar Nokta: That makes a lot of sense and appreciate you giving that framework.

Omar Nokta: That's it for me.

Omar Nokta: Thanks, guys.

Sathish Sivakumar: Your next question comes from a line of Sathish Sivakumar from City.

Sathish Sivakumar: Your line is open.

Sathish Sivakumar: Thanks, Xavier.

Sathish Sivakumar: Thank you.

Sathish Sivakumar: I've got three questions here.

Sathish Sivakumar: Maybe just to start off with on the tax rate.

Sathish Sivakumar: If you look at it and go to two, you are up less to million, how shall we think about going forward into quarter three and quarter four?

Sathish Sivakumar: I may be for the full year in terms of the tax charges on the PNL.

Sathish Sivakumar: And then the second one is around the vessels that are coming up for renewal.

Sathish Sivakumar: So you got about 51 vessels that are coming up for renewal, including 24 and 25.

Sathish Sivakumar: Given whether it's our trade, would you still be interested in giving those vessels back, or would you look to renew them?

Sathish Sivakumar: And then the third one, you did slide that in the cashflow bridge where you pointed about 380 million down payments for 10 LNG vessels and also payment for five vessels.

Sathish Sivakumar: Or actually think about for the remaining eight vessels.

Sathish Sivakumar: And do you expect to take another debt service charge in the coming quarters, or will be mostly in 25?

Xavier Destriau: Yeah, thank you.

Xavier Destriau: Thank you, Xavier.

Xavier Destriau: I'll try to take your question, whatever the other.

Xavier Destriau: So the first one, we'll respect to tax rates for the full year of 2024.

Xavier Destriau: We don't expect to interest significant tax charge in 2024, as we will still be able to benefit in the way from the taxes that we generated in 2023. And that we can carry forward in front of the profits that we are making or expect to make in 2024.

Xavier Destriau: We should not expect a significant tax charge in our early PNL.

Xavier Destriau: And we continue to need to make room for these new ships that are yet to be delivered.

Xavier Destriau: These eight ships that are coming between now and the end of the year.

Xavier Destriau: And as I was saying, also very wrong, by doing just that, we will continue to increase our operating capacity from 70050 of the TU today to 80000 TU by the end of the year.

Xavier Destriau: Then it comes to 2025.

Xavier Destriau: And then we do not have any new bills delivered expected, but we have indeed the 36 ships that will cover for renewal in 2025.

Xavier Destriau: And we will need to make the determination as to whether we want to reach after a sum of all of these capacity to continue to operate on the 80000 TU equivalent voltage on it, depending on where the market will be in 2025 and mostly basis, when we have to make the decision to let go of the ship or to potentially seek rechartering of the capacity.

Xavier Destriau: But those 35 ships will present about 3040,000 TUs so from 80000 TUs at your end, we could end up if we had to downside closer to 650 by the end of 2000.

Xavier Destriau: 25.

Xavier Destriau: And with respect to your last question on the down payment for the 8 shifts that are yet to be delivered, we now expect two of the remaining 8,000 TUS shifts and the six of the, sorry, the opposite by the way, let me just double-check here quickly.

Xavier Destriau: Yes, we, sorry, we expect six 8,000 TUS shifts.

Xavier Destriau: And two, of the smaller 5,000 TUS, the source, we only have down payment commitments for the 8,000 TUS shifts, so those, those are six, the source, 20 million dot each, we represent only the 20 million dollars between now and the end of the year.

Sathish Sivakumar: Okay, thank you.

Sathish Sivakumar: You mentioned about, like, the very levels would determine whether you want to remove them.

Sathish Sivakumar: So just to clarify, so you, it's mainly the freight rates rather than the charter rates, right? Or, sorry, I guess the two are somewhat linked.

Sathish Sivakumar: If we are in a situation where the charter environment continues to be elevated, yes, that's a translation of there is a deal of shortage of capacity and the shortage of capacity is normally a good factor to sustain a limited freight rate. So if we are to be in this environment, we might want to take some charter in order to continue to capture this good market condition.

Sathish Sivakumar: What I think we will, we will be very mindful about at that time, if we were to be opportunistic, bearing in mind that the long term view or the long term view still points towards potential significant over capacity, we would want to limit commitment in terms of charter duration to show the short term charter.

Sathish Sivakumar: So I think the arbitrage will be on the duration and if we decide to reach out to some of the capacity, if the rate at the charter rate are perceived elevated, we would not want to lock ourselves for long period, but potentially reach out on an ongoing basis for as long as we see the freight as a demand supporting this type of commitment.

Sathish Sivakumar: Thank you, thank you.

Nils Thomason: Your next question comes from a line of Nils Thomason from Family Securities.

Nils Thomason: Your line is open.

Nils Thomason: Hi, thanks for taking my question.

Nils Thomason: It's just so we understand you correctly.

Nils Thomason: I think you alluded that freight rates will be higher in Q3 and then they will trend downwards in Q4 and that's what's baked into your guidance.

Nils Thomason: But can you tell us something what you expect in terms of the container demand, do you expect a normalization of the year and year growth that we've seen so far towards the end of the year or is that based on a continued growth in the containers throughput throughout the year.

Nils Thomason: Look, I think we believe that 2024 overall in terms of a growth in demand will be better than what we initially planned when we entered into 2024.

Nils Thomason: So clearly we are stronger from start of the year. We talked about maybe this is because in the second quarter we had a little bit of an early peak season in which case some of the volume that would have been expected to occur later in the year may have been a little bit front loaded.

Nils Thomason: What we think is that the second half should be okay from the overall demand perspective what we are monitoring obviously is the inventory level in the U.S.

Nils Thomason: And if that was to a pick up meaningfully, then I would suggest that maybe the underlying demand is not as strong.

Nils Thomason: But today although those inventories have started to pick up from the lower levels of earlier this year, there are still not yet at the alarming level.

Nils Thomason: So it will very much be a function of whether the demand continues to be okay. That will ...

Nils Thomason: Potentially leads to a race continuing of sliding or reducing at a lower pace.

Nils Thomason: That will really much be a function.

Nils Thomason: This is why it's very difficult to forecast the force holds because the two will be most probably linked.

Nils Thomason: In terms of capacity, there is no supply to be expected here.

Nils Thomason: We assume that the race in disruption continues towards the second half.

Nils Thomason: Then the new bill of storage that is going to be delivered in terms of overall T, equivalent is known.

Nils Thomason: So the known is to which extent the demand will soften in the second half compared to the first.

Nils Thomason: But today we don't have any clear allow single that the demand in the second half would collapse.

Nils Thomason: Okay, thank you.

Elana Holzman: And this concludes our question and answer session.

Elana Holzman: I will now turn the call back over to Elie Glickman, ZIM President and CEO for closing remarks.

Elie Glickman: Thank you.

Elie Glickman: We are very pleased to report strong Q2 financial and operational results today. This performance illustrate ZIM continued success in advancing our fleet transformation, our commercial agility and outstanding execution while capitalizing on a rate environment that has remained stronger for longer than anticipated.

Elie Glickman: We are confident the steps we have taken to enhance our operational and commercial resilience will continue to drive long-term sustainable goals.

Elie Glickman: As we look towards remainder 24, we increase our full list guidance and now believe that backup of 24 will be stronger as compared to the first half.

Elie Glickman: In the second quarter, we achieve record carried volume as a direct result of ZIM strategic decision to upscales and modernize our fleet. And we expect to continue to see incremental benefits as new larger cost effective vessels join the fleet.

Elie Glickman: We are committed to further implementing our differentiated strategy, best serving our loyal customer and maximizing value for all our stakeholders.

Elie Glickman: Thank you again for joining us today.

Elie Glickman: We look forward to sharing with you our continued progress.

Elana Holzman: This concludes today's conference call.

Operator: Thank you for your participation.

You may now disconnect.

Q2 2024 ZIM Integrated Shipping Services Ltd Earnings Call

Request a DemoDemo

ZIM

ZIM Integrated Shipping Services

Earnings