ZIM Integrated Shipping Services Ltd.

Thank you for standing by and welcome to the Zim Integrated Shipping Services second 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 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, simply press star one again. Thank you. I'd now like to turn the call over to Alana Holzman. You may begin.

Thank you, Operator, and welcome to ZIM's Second Quarter 2024 Financial Results Conference Call. Joining me on the call today are Eli Glickman, ZIM's President and CEO, and Xavier Despleaux, 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 of 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 Giltman. Eli.

Thank you, Ilana, and welcome, everyone. Zim's positive momentum continues in the second quarter, and we are pleased to report strong Q2 results today. highlighted by double-digit volume growth to a record high carriage volume and increased guidance for the full year. Zim generated net income of $373 million and revenue of $1.9 billion at the second quarter, Adjusted EBITDA was $766 million and adjusted EBIT was $488 million, reflecting adjusted EBITDA margin of 40% and adjusted EBIT margin of 25%. We maintain a total liquidity of $2.3 billion at quarter end. I'm particularly proud of the record we set this quarter in terms of our carried volume, which totaled 952,000 TEU. We achieved double-digit growth as planned, significantly outpacing global container market growth. This achievement is of course a direct outcome of our strategic decision to upscale our capacity, but not less important, has been the exceptional execution of our employees globally. For that, I would like to send them. Slide number five. Given our performance today and continued market strength, we have raised our 24 guidance ranges. We anticipate full-year adjusted EBITDA between $2.6 billion to $3 billion and adjusted EBIT between $1.45 billion to $1.85 billion. Xavier, our CFO, will discuss additional factors driving our 24 guidance in his prepared comments. We remain committed to returning capital to shareholders. As such, per our dividend policy, which calls for a payout representing 30% of quarterly net income, our board of directors has declared a dividend of 93 cents per share, or a total of 112 million dollars on account of Q2 results. As we look toward the remainder of the year, our outlook for the second half has improved, reflected in our new guidance. We now expect a stronger back half of 24 as compared to the first half. To date, the Red Sea crisis has not improved. Ongoing supply constraints, including port congestion, and equipment shortages, coupled with strong demand, have continued to put upward pressure on spot rates that we anticipate enduring through the third quarter. However, taking a longer-term view, market dynamics still point to supply growth significantly outpacing demand, setting up for a reversion following recent peak rates. While the container shipping industry has always been volatile, our objective at Zim was to build a resilient business with a transformed fleet. Importantly, we have maintained flexibility to adjust the size of our fleet depending on how market conditions evolve moving forward and to match our commercial strategy slide number six the primary pillar of zinc transformation is our fleet renewal program and we continue to make tangible progress as new vessels are delivered thus far 38 of our 46 new-built container ships have been added to ZIM fleet, including all 10,000-15,000 Tu-LNG-powered vessels and 12 out of 18 8,000 Tu-LNG-powered vessels. As we've previously highlighted, our new-built vessels are more modern, fuel-efficient, larger, and better suited to the trades in which we operate. Our cost per carry to you continue to decline as these cross-effective and fuel-efficient new-built vessels replace older, less efficient, and more expensive charter capacity, which we continue to re-deliver back to the vessel owners as planned. We have also seen financial benefit from our utilization of LNG since it has proven to be more cost-effective than LSFO. We are also pleased to see that other shipping companies are increasingly recognizing the advantages of LNG-powered vessels. ZIM is proud to have been an early adopter and advocate for LNG as a key solution to drive the transition to lower carbon marine fuels. This decision has enabled us today to be the first and only liner to operate two separate services on the Asia to U.S. East Coast trade with LNG-fueled vessels. As already mentioned, Our upscale fleet has delivered commercial benefit as we carried record of 952,000 TU this quarter, an increase of 11% compared to Q2 last year and 13% compared to the first quarter. Specifically, our Trans-Pacific, our main trade, we grew our carried volume in Q2 by 29%. compared to the Q2 last year, and 22% compared to the first quarter. We remain agile in our fleet deployment and focus on adapting the services we offer as customer demand shifts. As such, at the end of the second quarter, we launch a second premium service from China to the U.S. West Coast to meet strong demand on this trade. Also, contributing to our Q2 result and improved guidance is the decision we made earlier this year to revisit our commercial approach of an approximately 50-50 split between spot and contract volume, Instead, our spot exposure in the Trans-Pacific trade is approximately 65%, enabling XIM to benefit more significantly from the upward pressure we have seen on spot trade. I would like also to highlight our growing volume in the Latin America trade as we have taken steps to launch new lines and expand our market share in this region. We grew our volume this quarter in Latin America by 90% compared to Q2 last year and 8% versus Q1-24. As we have discussed previously, Latin America has been a focal point for us where we see long-term growth and profitability potential as we are pleased with the progress we are making in increasing our market share. Slide number seven. Before I turn the call over to Xavier, I would like to briefly touch on our tech investment. We believe there continues to be value in investing in companies developing disruptive technologies complementary to our core shipping business as potential growth engine. We recently added two very interesting companies to our portfolio. The first, Carbon Blue, our first investment in a climate-related technology. We participated in the seed funding round alongside other financial and strategic investors. Carbon Blue develops groundbreaking water-based carbon dioxide removal technology that is unique in its ability to utilize any type of water in its environmentally friendly process. As such, Carbon Blue's technology has the potential to convert any existing water infrastructure into an asset capable of removing CO2 from any water source, freeing the water up to absorb more CO2 from the atmosphere. The second investment is in Peak Commerce, a startup developing an innovative robotic grasping technology. Peak Commerce solution combines advanced robotics and artificial intelligence to transform how logistics centers and warehouses handle packaging processes, overcoming the difficulty robots have in identifying items with different weight or shapes. e-commerce unique solution, enhance efficiency, reduce operational cost, and ensure accuracy, setting new standards in the logistics industry. As we previously indicated, while these investments are small, they are consistent with our organizational culture, which promotes a natural innovation in creativity. We are proud to help these companies address critical market needs and fulfill their potential as active strategic investors. On this note, I will turn the call over to Xavier, our CFO, for a more detailed discussion of our financial results, our Update 24 guidance, as well as additional comments on the market environment. Xavier, please.