ZIM Integrated Shipping Services Ltd.

Thank you for standing by and welcome to the Zim Integrated Shipping Services first quarter 2024 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'd 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. I'd now like to turn the conference over to Alina Holtzman, Head of Investor Relations, you may begin.

Thank you, Operator, and welcome to Zim's first quarter 2024 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 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 on Form 20F filed with the SEC in March 2024. We undertake no obligation to update these forward-looking statements. At this time, I would like to turn the call over to Zim's CEO, Eli Glickman. Eli?

Thank you, Ilana, and welcome everyone. Slide number three. Zim began 2024 with positive momentum. We leveraged market conditions and coupled with the strong execution of the Zim team globally, we delivered solid Q1 results. Based on current market conditions, Our outlook for the remainder of the year has improved, and as such, we now expect our full year 24 financial performance to be better than our 23 results. Our strategic plan to upscale our fleet and operate larger vessels to improve our cost structure is paying off, and we believe that in 2024, we will achieve our volume growth expectations outperforming the market. ZIM earnings in the first quarter reflect stronger spot rates, which resulted from disruption in the global logistics supply chain. Slide number four. We delivered revenue of $1.56 billion and net income of $92 million. Adjusted EBITDA was $427 million and adjusted EBIT was $167 million, reflecting adjusted EBITDA margin of 27% and adjusted EBIT margin of 11%. Our total cash position of $2.25 billion at quarter end remains strong, Our Q1 results reflect the dynamic nature of the container shipping industry. Today, tensions in the Red Sea have not eased and continue to disrupt global trade. We have seen freight rates significantly increase from November 23 lows as overcapacity in the market is being absorbed. As we look forward, we expect freight rates to remain higher for longer than originally anticipated. While we cannot predict when this disruption will end, there does not seem to be a solution in sight. Moreover, in recent weeks, we have seen spot rate increases spreading to additional trades which are not directly impacted by the Red Sea disruption and which previously did not experience rate increases. Certain indication of increased demand and constraint on equipment added to the supply pressure may be the cause of this recent trend. Going to slide number five. Given this stronger rate environment now impacting more trades, our outlook for the year is more positive. Therefore, we are raising our full year 24 guidance and now expect to generate adjusted EBITDA in the range of $1.15 billion $1.55 billion, and adjusted EBIT between $0 to $400 million. As per our dividend policy, which provides for a payout of 30% of quarterly net income, our board of directors has declared a dividend of $0.23 per share, or a total of $28 million on account of Q1 results. While the bear case scenario from a financial perspective has likely been avoided in 2024, we would like to remind you that our market is extremely volatile and that until recently, the disruptions which drove rates up were primarily supply-driven. It remains to be seen whether the improved demand we are currently witnessing is sustainable and whether it would support freight rates for the remainder of 2024. Overall market dynamics still point to supply growth significantly outpacing demand growth with significant deliveries this year and to a lesser extent next year as well. As such, our longer-term expectations for the market have not changed. It remains our view that once the Red Sea crisis is resolved, we will likely revert to the supply-demand scenario that had begun to play out in 2023. We maintain the view that the industry will face a more challenging second half of this year, irrespective of the duration of the Red Sea crisis as more new builds, particularly large capacity vessels, are delivered. This will likely adversely affect our results in the third and fourth quarters. We continue to assume that the second half of 2024 might be weaker than the first half. Xavier, our CFO, will discuss additional factors driving our 24 guidance in his prepared comments. Before I turn the call over to him, I would like to provide an operational and commercial update and highlight Zim's progress execution, executing strategic objectives thus far in 24. I'm going to slide number six. Our transformation is well underway and has begun to produce tangible results. We are very pleased with our progress and are confident that with respect to our fleet and cost structure, ZEE will emerge in a stronger position in 2025 and beyond, as our transformation continues to deliver incremental benefits. The primary pillar of ZEE transformation is our fleet renewal program executed to enable more efficient and competitive operations. We secure a total of 46 new-built container ships, of which 28 are LNG-powered. Today, 30 new-built vessels have already been delivered to us, including all 10,000-15,000 EU LNG vessels and 9 out of 18 8,000 TU LNG powered vessels, which we are deploying on the strategic Asia to the US East Coast trade. Our new fleet improves our cost structure and supports long-term profitable growth. Importantly, these new vessels are more modern, fuel-efficient, larger, and better suited to the trades in which we operate. This continues to reduce our cost per TU, and these cost-effective new-built vessels are replacing older, less efficient, and more expensive charter capacities. Moving forward, we expect to continue seeing gradual cost per TU improvement as we meet our volume growth targets. In addition to improving our cost structure and enabling long-term sustainable growth, our fleet renewal program addresses a central objective of our ESG roadmap, reduce the environmental impact of our operations and help fight climate change. The benefits of our new fleet from an environmental perspective are worth mentioning again. Next year, once we receive all our new builds and we deliver existing charter tonnage, over 50% of our operated capacity is expected to be new build. Approximately 40% of our operated capacity is expected to be LNG powered, making ZIM among the lowest carbon intensity cars in the world. Already today, 30% of our capacity is LNG powered and we operate the greenest fleet in terms of use of alternative fuels. Sustainability is a core value for ZIM and we are pleased to have recently published our six annual ESG reports. It outlines how ZIM addresses increasing demand from our various stakeholders for a more proactive ESG approach. In 23, ZIM achieved a 23% drop in carbon intensity of our operation compared to the prior year. This was driven in part by our new LNG vessels, which replaced other vessels and significantly cut our carbon emissions. We also decreased vessel speed and added vessels to routes to comply with emerging regulations. We are proud of the progress we made in 2023 and are well on our way to reaching our target of reducing carbon intensity by 30% by 2025 versus our 2021 baseline. We remain committed to reducing our GHG emissions to net zero by 2050, a more ambitious target than the one set by the IMO. We recognize that the implementation of ESG-focused strategies is an ongoing process and will continue to prioritize promoting responsible corporate practice to create long-term sustainable value for all our stakeholders. Operationally, We also remain focused on aligning our fleet size with demand levels and rationalizing our fleet to minimize cash burn. At the beginning of this year, we had a total of 32 vessels up for renewal in 2024. Thus far, we have re-delivered 11 vessels and anticipate the reminder will be re-delivered over the course of the year. Turning next to our network of services, the agile nature of our commercial strategy has continued to serve Zim well. During the first quarter, we continued to adapt our network to change in customer demand. In Q1, we grew our volume on Trans-Pacific, leveraging our larger capacity vessels and new lines open to LA and Vancouver. We maintain our unique commercial position on this strategic trade for ZIM as the only carrier to call the US East Coast with LNG-fueled vessels. In fact, we operate LNG vessels on two different services in this trade. As the only carrier able to offer shippers a pathway to significantly reduce carbon emissions on this trade, We believe that our differentiated offering enhances our competitive position and supports our volume growth target. We are also pleased with our growing volume in Latin America. We opened several new lines in 2023 in this trade and continue to expand our network in Q1. As we have discussed previously, Latin America has been a focal point for us where we see long-term growth and profitability potential. On this note, I will turn the call over to Xavier Arcefo for a more detailed discussion of our financial results our revised 24 guidance, as well as additional comments on the market environment. Xavier, please.