ZIM Integrated Shipping Services Ltd.

Thank you for standing by and welcome to the Zim Integrated Shipping Services second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. 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 one on your telephone keypad. If you would like to withdraw your question, again press the star one. Thank you. Alana Holtzman, Head of Investor Relations, you may begin your conference.

Thank you, Rob, and welcome everyone to Zim's second quarter 2023 financial results conference call. Joining me on the call today are Eli Glickman, Zim's President and CEO, and Xavier Destriot, Zim's CFO. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements regarding expectations, predictions, projections, or future events or results. We believe that our expectations and assumptions are reasonable. 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. You are kindly referred to consider the risk factors in cautionary language described in the documents the company filed with the Securities and Exchange Commission, including our 2022 annual report filed on Form 20F in March. We undertake no obligation to update these forward-looking statements. At this time, I would like to turn the call over to the CEO, Eli Glickman. Eli?

Thank you, Ilana, and welcome everyone to today's call. During the second quarter and here today, near-term container shipping market conditions continue to be challenging. Our performance in the second quarter of 2023 reflected this reality. In Q2, we generated adjusted EBITDA of $275 million and adjusted EBIT loss of $147 million. Cash flow from operations was $347 million. Our total cash position of $3.2 billion at quarter end remained strong. Going to slide four. ZIM is currently in transition period. In early 2021, we embarked on our fleet renewal program to improve our cost structure and support long-term profitable growth. During this period, we secured, through a series of charter agreements, a highly competitive fleet and one that is optimally suited for our commercial strategy. This fleet is made up of 46 new built vessels, including 28 LNG-powered container ships. Of the 46 new builds, eight are already part of our fleet today. four 12,000 TU vessels, and four LNG-powered 15,000 TU vessels. We expect the delivery of three additional 15,000 TU LNG vessels this year, and the remaining three are expected in the first few months of 2024. The commercial environmental benefits of this cost competitive capacity are worth mentioning again. Our 1015,000 TULNG-fueled vessels were designed and built to serve on the Asia to U.S. East Coast Trail. This is a strategic service for ZIM, and one in which our market share exceeds 10%. When we operate our ZCP service with all 10 new built 15,000 TU vessels, we expect to benefit from a very competitive cost per TU on this trade. Moreover, ZEUN is the first liner to operate LNG powered vessels on the Asia to US East Coast route, which we are confident will increasingly become a significant commercial differentiator. We view it as imperative that we provide customers with a service offering that enables them to reduce their carbon footprint. At the same time, adding state-of-the-art energy-fueled vessels further zings on sustainability goals and supports our commitment to reduce greenhouse gas emissions to net zero by 2050. Our fleet renewal program also included 32 smaller, more versatile new built vessels, out of which 18 are LNG powered 7,000 TU vessels. These smaller vessels support our global niche commercial strategy and enable us to maintain flexibility to target better performing trades. The first three 7,002 vessels are expected this year and the remaining in 2024. Once we receive all 28 LNG vessels, we expect that approximately a third of our operated capacity will be LNG fuel, which will position ZIM among the lowest carbon intensity operators. In 2021, we also leveraged our strong cash generation to invest almost $1 billion in renewing our container fleet, particularly our reefer equipment. Today, we operate the youngest reefer fleet in the industry, which is a competitive advantage with this higher value cargo. We were also early to identify the attractive dynamics of car carriage caused by tight supply. We successfully grew our operated capacity from two car carriers in early 2021 serving the local Israeli market to operating 16 car carriers today with global coverage and benefiting from strong demand. In the near term, during this downturn period, as we await the delivery of the remainder of our cost-effective new build capacity, improving our cost structures remains an underlying priority for Zim. We continuously review our network and services and take action to rationalize our existing capacity to minimize our cash burn. Today, In 2023, we re-deliver seven container vessels to adapt our fleet to current demand levels and maximize utilization. Xavier, our CFO, will provide additional information about our fleet in his prepared comments. During this challenging market, we continue to look for opportunities to establish resilience in our business and focus on optimizing profitability. We remain committed to our core trade lanes, specifically Asia to U.S. East Coast and intra-Asia, and expect our network will continue to evolve as customer demand change and new commercial opportunities arise. For example, in Q1, we suspended our express service from China to Los Angeles as rates to the West Coast collapse and launched in Q2, Colibri, a new service from South America West Coast to US East Coast. In this service, we leverage our strong griefer offering and carrying volumes have been consistently growing. Moving to slide five. While we remain cautious in our capital allocation decisions, we believe there continues to be value in investing in growth engines which complement our core shipping activities. In June, we expanded our partnership with Fortisys, one of our portfolio companies. Fortisys is an innovative fintech platform designed to modernize cross-border trade financing. As a reminder, Fortisys uses AI tools to streamline the credit application process and can offer small and medium-sized importers faster and cheaper access to working capital financing needs than traditional financial institutions. ZIM now offers this unique financing solution to customers directly, as well as via our digital freight forwarder, Ship Forward. When it comes to this investment, the capital requirements are relatively modest, yet the potential is significant. Moving to slide six. In conclusion of my prepared comments, I would like to address our revised guidance for 2023 and current freight rates. As previously announced, we now expect to generate in 2023 adjusted EBITDA of $1.2 billion to $1.6 billion and adjusted EBIT loss of $500 million to $100 million. This revised forecast is driven by our expectation that peak season will be soft, bringing down our expectation for volume growth to low single digit and no material improvement in freight rates in the second half of 2023. That would normally be consistent with seasonality. The improvement we have recently seen in spot freight rates is clearly a welcome development. However, I would like to caution that the significant improvement as it related to ZIM is focused on Trans-Pacific rates, whereas other trades we operate in haven't seen a similar improvement. Moreover, This improvement, even if sustained, does not have immediate impact on our financial and does not change our full-year guidance. Marginally, we may benefit from improved spot freight rates as long-term contracts this year account for only about 30% of total trans-Pacific volume. I would also like to reiterate that our strong balance sheet and ample cash will serve Zim well during a prolonged downturn and allow us to operate from a position of strength and maintain a long-term view. On that note, I will turn the call over to Xavier Arousifo for his remarks on our financial results and additional comments on the market. Please.