Shares of ZIM Integrated Shipping Services (ZIM) sailed higher on Wednesday after the company shrugged off worries about declining global trade to post a handsome beat on the bottom line. It comes as ZIM stock has been whipsawed by rumors of a management buyout, fears about declining shipping rates and escalating tariffs weighing on expected trade volumes.
ZIM EPS Beats
ZIM posted net income for the 2024 Fiscal fourth quarter was $563 million, returning to profit after a net loss of $147 million in the fourth quarter of 2023. It recorded earnings per share of $4.66, up from a loss of $1.23 per share a year before and well ahead of the consensus forecast of $3.49.
Shares of Israeli-based ZIM jumped earlier this week after Street Insider reported that the shipping company’s CEO Eli Glickman was considering a management-led buyout.
While these reports were unconfirmed, Glickman hailed the latest results, saying the company delivered “record carried volume as well as exceptional profitability” in 2024. “Based on our continued progress upscaling our capacity and optimizing our cost structure, we reported our best results ever, excluding the extraordinary COVID period,” he added.
Total revenues jumped to $8.43 billion for the full year of 2024, compared to $5.16 billion for 2023, driven primarily by an increase in freight rates and carried volume. Average shipping rates in 2024 were about 50% higher last year than in 2023. Last year was good for container rates with the sector revived on constrained supply due to re-routing around sea-borne attacks. ZIM stock rose 75% in the last 12 months as freight rates jumped.
2025 Looks Tougher
Looking ahead, macroeconomic trends are appear less favourable. U.S. President Donald Trump’s tariffs have increased doubts about global trade patterns, while the cessation of attacks in the Red Sea has pushed freight rates lower.
Glickman acknowledged “current uncertainty related to geopolitics,” as well as broader macroeconomic headwinds which will push down earnings this year compared to last. In 2025, the company expects to generate adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $1.6 billion and $2.2 billion, down from $3.69 billion in 2024. It expects adjusted EBIT (adjusted earnings) of between $350 million and $950 million in 2025, versus $2.55 billion in 2024. According to the CEO this assumes trade conditions in the Red Sea will not normalize until the second half of the year “at the earliest.”
Is ZIM a Good Stock to Buy?
Wall Street analysts currently have a Moderate Sell rating on ZIM, based on just two analysts supplying price targets in the last three months. Nevertheless. Jefferies five-star analyst Omar Nokta recently raised his price target on the stock to $25, implying about 23% upside. Figures are liable to change after the earnings update.
Questions or Comments about the article? Write to editor@tipranks.com