Alexia Dogani

Alexia Dogani inquired about ZIM's current considerations for cost savings, including network resizing and efficiency measures, and their potential scope. She also asked for an update on CapEx commitments, new lease inceptions, and the expected roll-off of the asset base (vessel redeliveries) over the next 12 to 18 months. Furthermore, Dogani questioned ZIM's financial leverage parameters, especially in a potential downturn, and how increased vessel ownership by operators might impact competitive dynamics and market discipline.

Answer

CFO Xavier Destriau stated that ZIM continuously seeks agility in response to market conditions, emphasizing that the company will retain its most efficient, long-term chartered vessels while potentially redelivering less efficient ones. He clarified that approximately 25% of ZIM's operated capacity (around 192,000 TEUs) is on short-term charter and could be returned, with about 80,000 TEUs potentially redelivered in 2026. Destriau noted very limited cash CapEx commitments, primarily for equipment and IT. He also discussed how ZIM's strategy of securing new builds via long-term charters with purchase options provides control and reduces reliance on the short-term charter market, impacting competitive dynamics.

Alexia Dogani inquired about ZIM's plans for cost savings and network resizing, current CapEx commitments (cash and new lease inceptions), the expected roll-off of the asset base over the next 12-18 months, any target financial leverage parameters, and the impact of increased vessel ownership on competitive dynamics and market discipline.

Answer

CFO Xavier Destriau stated that ZIM continuously seeks agility and will prioritize retaining the most efficient, long-term chartered vessels while potentially letting go of less efficient ones. He noted that 70-75% of the current 710,000 TEU capacity is long-term chartered or owned, with approximately 80,000 TEUs potentially redeliverable in 2026. Cash CapEx commitments are limited, primarily for IT and equipment renewal. He did not specify financial leverage parameters but highlighted ZIM's timely transition to secure needed capacity through partnerships with vessel owners, reducing dependency on the short-term charter market.

Alexia Degani from JPMorgan asked about any positive timing effects on Q3 from high June spot rates and the impact of increased vessel capacity on load factors for the second half. She also sought clarification on the number of TEUs up for charter renewal and questioned the company's breakeven unit cost level given the industry-wide rise in costs.

Answer

CFO Xavier Deslio confirmed that due to revenue recognition rules, the surge in spot rates from late Q2 will partially benefit Q3 results. He clarified that operated capacity in H2 will be comparable to last year, not substantially higher. He also distinguished between the 250,000 TEUs on short-term charter and the 140,000 TEUs with charters expiring in 2025-2026. Regarding costs, he detailed how fuel, newbuild prices, charter rates, cargo handling, and network adjustments have all contributed to a higher cost structure versus pre-COVID levels.

Alexia Dogani asked about near-term network development, including the redeployment of capacity and the speed of reintroducing services. She also requested a breakdown of the fleet's charter duration profile and inquired about opportunities for structural cost savings compared to pre-pandemic levels.

Answer

CFO Xavier Destriau highlighted ZIM's agility, noting the company suspended its ZX2 service due to tariff impacts but is resuming it immediately following the 90-day tariff pause. He detailed that two-thirds of the fleet is on long-term charters (>5 years) or owned, providing cost stability, while one-third is on short-term charters, offering flexibility with 81,000 TEUs up for renewal in 2025. For costs, he said the focus is on avoiding expenses, such as optimizing empty container repositioning, as major savings were already achieved through the fleet transformation.

Alexia Dogani asked for commentary on the recent drop in spot rates, the evolution of ZIM's fleet strategy from short-term agility to long-term charters, and the capital allocation rationale for paying a high-yield dividend instead of purchasing more vessels to reduce charter costs.

Answer

CFO Xavier Destriau attributed recent rate uncertainty to post-Chinese New Year seasonality and tariff concerns but noted that initial contract negotiations are encouraging. He explained the shift in fleet strategy was a necessary response to post-COVID market changes to secure core capacity and gain cost visibility. Regarding capital allocation, he stated that long-term chartering of new LNG vessels avoids taking on the residual value risk of a specific green technology, providing long-term flexibility.

Requested clarification on the high and low-end scenarios for the full-year guidance, questioned the Q2 volume outlook, and asked about the magnitude of tariff de-escalation needed for a strong recovery.

Answer

The guidance range reflects new uncertainties. The high end (~+4% volume growth) assumes a quick resolution to trade tensions, while the low end (~-1% volume growth) assumes an entrenched trade war leading to a U.S. recession. Q2 volumes are not expected to be negative, as the 35% drop in the China-U.S. lane (5% of total volume) is offset by ~4% growth in the other 95% of volumes. There is no simple formula for tariffs, but a normalization of trade relations would lead to a volume catch-up, while continued conflict risks a recession.

Inquired about the execution progress of the new CWU deal, the dependency of Royal Mail's future profitability on efficiencies versus revenue growth, and the strategy for out-of-home parcel services. A follow-up question asked about using other Royal Mail assets besides property to fund investments.

Answer

Executives stated that progress with the CWU deal is reasonable, with key changes like seasonal hours implemented and more to come. Royal Mail's turnaround depends on both topline revenue recovery and delivering efficiencies. The out-of-home strategy is under review to enhance customer convenience, similar to GLS's network. To fund this, the company is exploring liquidity options across the group, including asset sales and sale-and-leasebacks, not just property.