ZIM Integrated dividend drought continues as outlook darkens

ZIM Integrated’s (NYSE: ZIM) woes continued in Q2 as demand for shipping waned and shipping costs tumbled. Its revenue plunged to $3.4 billion during the quarter from $1.34 billion in the same quarter in 2022.

ZIM Integrated’s loss jumped to $213 million in Q2 after it made a profit of over $1.3 billion in Q2’22. Its adjusted EBITDA was $275 million. As a result, the company downgraded its full-year guidance. It expects to have an adjusted EBITDA of between $1.2 billion and $1.6 billion.

ZIM Integrated is facing major headwinds as demand for container eases. After soaring to almost $10,000 during the pandemic, the average shipping costs have dropped. Its average rate by TEU dropped by 67% to $1,193. In a statement, the CEO said:

“We believe our ample liquidity and solid balance sheet will enable ZIM to operate from a position of strength and maintain a long-term view even during a prolonged period of market weakness.”

ZIM Integrated is not the only struggling company in the shipping industry. As I wrote here, Maersk, the Danish company, said that its profit plunged by 72% as its revenue retreated by 40%. Similarly, Evergreen’s monthly revenue fell by 63.3%.

There is a likelihood that this weakness will continue for a while as most economies struggle. China, a leading exporter, reported that its industrial production and retail sales dropped in July. South Korea’s exports and imports also retreated in July. 

The biggest losers in ZIM Integrated’s woes are its income investors. While it has a strong balance sheet, the company will not pay dividends since it distributes 30-50% of its net income to shareholders.