ZIM Integrated Shipping Services Ltd.

integrated shipping services, Q4 and full year 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 one on your telephone keypad. I will now turn the conference over to Alana Holzman, Head of Investor Relations. Please go ahead.

Thank you, Operator, and welcome to ZIM's fourth quarter and full year 2023 Financial Results Conference Call. Joining me on the call today are Eli Glickman, ZIM's President and CEO, and Xavier Destrio, 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 materially. 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 filed today on Form 20F. we undertake no obligation to update these forward-looking statements. Before turning the call over to Eli, one housekeeping point. Since announcing the relevant charter agreements, we have referred to the 18 smaller LNG vessels as 7,000 TU vessels for their original design name and prior to their construction. The nominal capacity of these vessels is approximately 8,000 TUs. As such, going forward, We will refer to these vessels as 8,000 TEU vessels. At this time, I would like to turn the call over to Zim's CEO, Eli Glickman. Eli.

Thank you, Ilana, and welcome everyone to today's call. Reflecting on a challenging year, we at Zim have proven to be resilient and committed to excellence throughout our operation as we deliver the highest level of customer care even in the face of the industry disruptions and other operational challenges. The war situation in Israel is ongoing and continues to affect our employees here. We mourn the loss of all innocent lives and we continue to pray for the safe return of all Israelis who remains held hostage by Hamas in Gaza. Since the tragic events of October the 7th, our priority has been to ensure the safety and well-being of our employees and to minimize any service disruptions to our customers. I'm incredibly proud of the unwavering commitment that I have seen from our people throughout the organization during this challenging time and the collective spirit to continue to drive our business forward. Before discussing the current state of the market and Zim's strategic transformation, I will briefly address our financial results. Consistent with our latest expectations, our fully adjusted EBITDA was $1.05 billion and 23 adjusted EBIT loss was $422 million. These results were in line with the outlook we provided in November 23 and reflected the ongoing market weakness. Importantly, We ended the year with substantial liquidity of approximately $2.7 billion. Turning to slide four. Turning to the market environment, we've seen dramatic changes in recent months, demonstrating the volatility and dynamic nature of our industry. The escalating tensions in the Red Sea have had broad implications for container liners. In late November 23, to ensure the safety of our seafarers, our customers' cargo, and the vessels we operate, we made the decision to divert all ZIM vessels to pass through the Red Sea around the Cape of Good Hope until further notice. These Red Sea diversions, which others have also implemented, have been a destructive force across the industry, absorbing some of the overcapacity in the market and driving freight rates in certain trades higher. In January 24th, stricter draft restrictions imposed in the Panama Canal, including on container vessels, added to the supply squeeze we are currently experiencing. While this disruption had a minimal impact on our Q4 results, we expect first quarter and potentially second quarter earnings in 2024 to reflect the improved spot rates. Yet, As we look toward the remainder of the year, it is worth noting that there is a fundamental difference between the current disruptions and the prevailing market conditions during the COVID-19 pandemic. The COVID-era market was characterized by a significant increase in consumer demand accompanied by unprecedented supply chain disruptions. Current market conditions, on the other hand, are primarily supply-driven, and the significant spot rate increases remain somewhat limited to trades more directly impacted by the disruptions. Once the Red Sea crisis is resolved, we will likely revert to the supply-demand scenario that began to play out in 2023, setting up a more challenging third and fourth quarter of 2024 for the industry, including us. Given that market dynamics in the area will depend largely on the duration of the Red Sea disruption, we are taking a cautious approach in establishing our 24 guidance. As such, in 24, we expect to generate adjusted EBITDA of $850 million to $1.45 billion and adjusted EBITDA of negative $300 million to positive $300 million. Xavier, our CFO, will discuss the underlying assumption for our 24 guidance in his prepared comments. Going to slide number five. This strategic transformation is progressing as planned and is already yielding the favorable outcomes we projected. As we have communicated previously, 23 and 24 were always expected to be in transition period. We are pleased with the decisive steps we have taken to enhance ZIM's future commercial and operational resilience. As a result of these actions, we expect ZIM to emerge in a stronger position than ever in 25 and beyond. as our strategic transformation continues to deliver gradual benefits. Most importantly, we have executed a fuel renewal program that will enable ZIM to operate more efficiently and competitively. Through a series of long-term charter agreements, we secure a total of 46 new built container ships of which 28 are LNG powered. 24 vessels have already been delivered to us and another 22 are expected to be delivered through the remainder of 24. The advantages of this fleet are worth highlighting again. The goal was to shift ZIM reliance on all the less fuel efficient and less green capacity to a cost and fuel efficient, largely LNG powered new built fleet. Our core fleet will be modern, larger and better suited to the trades in which we operate. Our cost per TU is declining as we continue to take delivery of the cost effective new built tonnage and re-deliver expensive COVID era vessels. We expect further improvement moving forward. From an environmental perspective, we expect approximately one-third of our operating capacity will be LNG-powered in 2025, establishing ZIM as a clear industry leader in terms of carbon intensity reduction. We are pleased to offer our customers a pathway to more eco-friendly shipping options and reduce carbon emissions. Today, ZIM is the only carrier to operate LNG vessels from Asia to the US East Coast. We are deploying 15,000 TU and 8,000 TU LNG powered vessels on two different key services. We believe this further enhances our competitive position on this strategic trade for ZIM. As I already mentioned, during the remainder of the year, we have 22 outstanding new build deliveries that once completed will further enhance our fleet and complete our fleet renewal program. Our decision to charter these LNG vessels was part of our long-term strategic plan to enhance our market position, particularly in the Trans-Pacific trade, partly in anticipation of the termination of the two MN lines, which did, in fact, happen. We wanted to ensure that ZIM operates a competitive fleet that would allow us to operate independently if needed and at the same time would also make us an attractive potential partner to other liners. Our collaboration with the 2M will end at the end of January 25 as per the termination of the 2M alliance. Yet, we are confident that our new cost and fuel efficient new build capacity better position us to reach new operational collaborations in the future. And we continue to believe in mutually beneficial operational partnership, which we'll continue to seek when possible. We are focused on ensuring our fleet in the best aligned with demand levels. To this end, we are committed to rationalizing our capacity whenever necessary to minimize cash burning. In 23, we re-delivered 32 vessels and we have a total of 32 charter vessels up for renewal in 24. Turning to our network, we are constantly reviewing our services to best address customers' evolving needs and take advantage of new commercial opportunities with growth and profitability potential. Our decision to reinstate our ZTX service in late 2023, connecting South China to Los Angeles, was very timely, and we are now benefiting from volume growth reaching the U.S. West Coast. We proved our agility once again when we launched a second ZIM-operated West Coast Bound Service early in the first quarter of 24, in addition to our collaboration with MSC on this trade. This service connects Asia, Canada, and the U.S. via the Vancouver Gateway and includes expanded rail connection across North America. This service is also benefiting from recent market tailwinds. Latin America, where we see long-term growth and profitability potential, has been a focal point for us throughout 2023. We opened a number of different services and we are pleased with our growing volume in this region. We also made adjustments to services calling East Mediterranean ports to address changes resulting from the Red Sea crisis and capture market share. we redeployed existing capacity to this service and did not charter additional capacity to maintain a weekly service on our Asia to East Med service. Delivering our signature Z-Factor customer care, which combines personal touch with advanced digital tools, remains a high focus. This year, especially against the personal challenges, We are especially pleased to receive better than ever result from our 23 annual customer experience service. We see positive trends in the important parameters such as satisfaction within customer loyalty and our customers view our service versus our competitors. Moving to slide number six. Our capital allocation strategy for 2024 remains unchanged and equally cautious. We intend to invest our resources to enhance our long-term value for the benefit of shareholders, namely our fleet, our equipment, as well as our gross engine, while at the same time, we continue to pursue cost-saving and cost-avoidance initiatives to preserve cash. So preserving cash remains a top priority. We believe there continues to be a value in investing in growth engines, namely selectively investing in early-stage companies developing disruptive technologies in our core shipping activities and broader logistic ecosystem and assisting these companies to reach their potential needs their potential as active strategic investors. An excellent example in our recent announcement to install cutting-edge tracking device on our dry van containers developed by Hooper System, one of our portfolio companies. We are excited to see our investment in Hooper's unique technological solution mature into what we believe is the most advanced tracking device for dry containers. At Zim, the use of technology and digital tools combined with our agility are core strengths which promote our operational and commercial resilience and efficiency. The upcoming months still represent a transition period for our company. but we are excited about what the future holds. During this time, while market conditions remain uncertain, our strong cash position will enable us to maintain a long-term view. Our entire organization is focused on returning ZIM to long-term sustainable profitability. On this note, I will turn the call over to our CFO, to Xavier, for more detailed discussion of our financial results, our 24 guidance, as well as additional comments on the market environment. Please.