ZIM Integrated Shipping Services Ltd Q2 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Omar Nokta - Jefferies - Analyst : Thank you. Hi, Eli and Xavier. Good afternoon. Congrats on a obviously 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 rates, which many times that doesn't go hand in hand. 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, there's 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 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 ZIM? And is there any color you can give us on the third quarter and how these volumes have fared thus far?

Question: Omar Nokta - Jefferies - Analyst : Okay. Thank you. Interesting. And I guess, maybe 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 in into them? Whether it's strategically or with respect to the balance sheet, any thoughts you can give on the uses of that additional free cash?

Question: Omar Nokta - Jefferies - Analyst : Got it. Thank you. And then just maybe a final one for me and a follow-up to just the last one on the dividend. Obviously, you paid another -- or you've declared a 30% payout for this quarter, your second one this year 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 of the full 50% at year end? I know it's obviously at the discussion 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 -- or is the mindset to prefer to hold on to the excess cash 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 color you can give there?

Question: Omar Nokta - Jefferies - Analyst : Yeah, understood. That makes a lot of sense and appreciate you giving that framework. That's it for me. Thanks, Xav.

Question: Sathish Sivakumar - Citi - Analyst : Thanks, Xavier. Thanks Eli. I got three questions here. Maybe just to start off with on the tax rate. If you look at in quarter two, you had a plus $2 million. How should we think about going forward into quarter three and quarter four, i.e., maybe for the full year in terms of the tax charges on the P&L? 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 where the rates are today, would you still be interested in like giving those vessels back? Or would you look to renew them? And then the third one, you did have a slide there on the cash flow bridge view, you pointed about $380 million down payments for 10 LNG vessels and also payments 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 '25? Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 19, 2024 / 12:00PM, ZIM.N - Q2 2024 ZIM Integrated Shipping Services Ltd Earnings Call

Question: Sathish Sivakumar - Citi - Analyst : Okay. Thank you. you mentioned about, like, say, the freight levels would determine whether you wanted to renew them. So just to clarify, so you -- it's mainly about the freight rates rather than the charter rates, right? Or would you still --?

Question: Sathish Sivakumar - Citi - Analyst : Got it. Thank you. Thanks, Xavier.

Question: Nils Thommessen - Fearnley Securities - Analyst : 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 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 continued growth in the container's throughput throughout the year?

Question: Nils Thommessen - Fearnley Securities - Analyst : Okay. Thank you.