Hello everyone and welcome to ZIM Integrated Shipping Services’ fourth quarter and full year 2024 financial results conference call. Please note that this call is being recorded. After the speakers’ prepared remarks, there will be a question and answer session. If you’d like to ask a question during that time, please press star followed by one on your telephone keypad. Thank you. I’d now like to hand the call over to Elana Holzman, Head of Investor Relations. You may now begin.

Thank you Operator, and welcome to ZIM’s fourth quarter and full year 2024 financial results conference call. Joining me on the call today are Eli Glickman, ZIM’s President and CEO, and Xavier Destriau, 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 2024 annual report on Form 20-F filed with the SEC today, March 12. 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 Elana, and welcome everyone. 2024 marked an exceptional year for ZIM, both financially and operationally. Today we are reporting our best results ever outside the extraordinary earnings generated during the COVID period. Operationally, consistent with our strategic objective to grow our volume, we achieved in Q4 a third consecutive quarter of record carried BTUs and delivered double-digit volume growth for the year. This is in line with our original guidance provided this time last year. This achievement helped drive our outstanding financial performance, highlighted by 2024 net income of $2.2 billion and revenue of $8.4 billion. Adjusted EBITDA was $3.7 billion and adjusted EBIT was $2.5 billion, with adjusted EBITDA margin of 44% and adjusted EBIT margin of 30%. We ended the year with total liquidity of $3.14 billion. Slide No. 5 - as we continue to generate strong cash flows, we are also delivering on our commitment to return significant capital to shareholders. Today, our board of directors declared a dividend of $3.17 per share - repeat, $3.17 per share - for a total of $382 million. This brings our total dividend payout on account of 2024 results, including the special dividend paid in December ’24, to $7.98 per share or $961 million, representing approximately 45% of ’24 annual net income. We are proud of this track record and pleased to share our success with shareholders, consistently paying dividends based on our strong earnings. Turning to Slide 6, looking forward to 2025, we are confident in our strategy and competitive position in the industry. Our guidance ranges for the full year of ’25, our adjusted EBITDA between $1.6 billion and $2.2 billion, and adjusted EBIT between $350 million and $950 million. Our business environment has always been impacted by external factors such as geopolitics, international and U.S.…

Thank you Eli, and again on my behalf, welcome to everyone. This slide represents our key financial and operational highlights. Our strong full year results are indicative of a robust market with elevated freight rates and resilient demand. ZIM generated revenue of $8.4 billion in 2024, a 63% increase compared to last year. During the year, our average freight rate per TEU was $1,888, 57% higher than in 2023 as we benefited from solid freight rates throughout the year. In Q4, our average freight rate per TEU was $1,886, a 71% increase year-over-year though 24% lower than the Q3 average freight rate of $2,480. Freight revenue from non-containerized cargo, which reflects mostly our car carrier services, totaled $497 million for the full year of 2024, compared to $535 million in 2023. The decline resulted from a partial reclassification in 2024 within revenue types. I would also note that in November, we delivered one of our car carriers and are now operating 15 ships, and we may opt to re-deliver additional vessels in 2025 depending on market conditions. Our free cash flow in the fourth quarter totaled $1.1 billion compared to $128 million in the fourth quarter of 2023. Free cash flow in 2024 totaled $3.6 billion compared to $919 million in 2023. Turning now to the balance sheet, total debt increased by $1 billion since prior year end, mainly due to the net effect of the incoming larger vessels with longer term charter durations attached. The new build capacity we have received, especially the LNG vessels are chartered for a period of eight to 12 years, creating a predictability in our cost structure with respect to this core capacity. Furthermore, we hold options to extend the charter period on 25 out of 28 of our LNG vessels, as well as…

Thank you. We are now opening the floor for a question and answer session. [Operator instructions] Your first question comes from the line of Muneeba Kayani from Bank of America. Your line is now open.

Thank you for taking my questions. Firstly on your guidance, I wanted to just clarify, it’s clear you’ve said it’s a second half [indiscernible] Red Sea reopening, but does that top end assume no reopening this year and the low end assumes early second half? If you could give us a sense of the timeline you’ve assumed and the range, that would be helpful. Secondly, just kind of on the USTR that you’d mentioned, was I right in thinking that you would consider moving capacity to other trade lanes in the scenario it is implemented, and can you tell us what’s your exposure to Chinese-built ships? Industry sources suggest it’s 34% - is that correct? If I may ask a third question, press articles last week suggested a potential management buyout. Can you please comment on that? Thank you.

Thank you Muneeba. Maybe taking your questions in the order you raised them, the first one, when we refer to our guidance range, today as we speak, we are still thinking it is more likely than not that the Red Sea will reopen sometime this year, so most of our guidance extreme numbers do include the scenario according to which the Red Sea would reopen, albeit the lower end of the guidance with early reopening and the higher range of the guidance with a later reopening, towards the end of 2025, which obviously remains to be seen. Second question with respect to the questions around the potential additional levy that could be imposed on the Chinese-built tonnage that would call at a port in the U.S., it is clearly a development that we are monitoring very closely. I think we are today still in the early days, we are still under the consultation period which will last up until, as you know, March 24, so it’s a little bit early to jump to conclusions as to whether they will be enforced or not, but clearly we are looking into that. You are correct - when we look at the capacity that we operate, we operate a mixture of Chinese-built tonnage and non-Chinese built, mostly Korean, and our Chinese-built capacity ranges within the 25% - 50% mark that is also referred to in terms of potential threshold for additional levy on the port calls in the U.S. I think, like I said, very early days to conclude what, if they were to be enforced, would be the effect on ZIM and on the overall industry. I think it would be very significant. The first thing that we would want to do is try to make sure that we limit to the…

Thank you.

Your next question comes from the line of Marco Limite from Barclays. Your line is now open.

Hello. Thanks a lot for taking my question. The first question is just a follow-up on the outlook. You have mentioned that you expect the first half to be quite stronger compared to the second half, depending on the opening of the Red Sea. Are we--I mean, my back of the envelope calculation takes me to, assuming an early reopening at the beginning of the first half, basically to first half EBIT positive, and then second half EBIT being negative at the low end of the range. Would you agree with that? My second question is on capex. Could you please a little bit more about the phasing of the renewals? Are those renewals more back-end loaded or are just throughout the year, and is the capex range including lease for 2025 assuming none of those charter agreements are renewed, or all of them are renewed? Thank you.

Thank you for the question. On the first part of your question with respect to the guidance, we do not really communicate quarterly guidance. What we really wanted to say this time around is that there is a lot of uncertainty ahead in 2025 clearly, as we tried to list some of them; but we have, as we sit today in mid-March, pretty clear visibility on the first quarter, obviously, and to some extent as well on the second, so we can say that the first half is going to be in outlook better than the second half. That is also mostly driven by the fact that the good market conditions that prevailed throughout 2024 and as we entered into the early months, or weeks of 2025, continued to be extremely strong. We had very strong volume pre-Chinese New Year with very strong resilience on the rate environment. That indeed contributed to a very strong start of 2025. Now as we speak, we are just after Chinese New Year, so after the slack period of Chinese New Year. We see the volume coming back, but maybe not as quickly as what would have happened in prior years. I think there is a lot of anxiety clearly still from the market with respect to what will be the ultimate effect on tariff policies between U.S. and China - everybody is a little bit still in wait and see mode, so we’ll see how that pans out. But I think this is why we felt confident that we could say the beginning of the year looks good, then there are so many factors of uncertainty thereafter that we wanted to remain more prudent when it comes to the second half of the year. Now talking about your second question, which is, I…

Thank you. If I may, just a follow-up on this. Are you willing to provide a range for capex plus debt service basically for ’25, based on whether you renew or not the expiring capacity? Thank you.

Capex-wise, what we have in ’24--what we had in ’24 is limited. It’s containers, it’s equipment mostly, and some also IT related capital expenditures. We have two--in terms of vessels, we have two 8,500 TEU ships that we announced recently we would acquire - those would be for less than $100 million transaction combined, and apart from that from a vessel perspective, what will happen is whether we do or do not re-charter some of the capacity that comes up for renewal. In terms of debt service or lease liability repayment, if you look at what was the situation--or if you look at our cash flow statements for 2024, the total amount reached between $2.5 billion to $2.6 billion altogether. That included the down payment that we paid for the new build capacity that was delivered to us of 29 ships altogether in 2024, and also included the option that we exercised on five vessels earlier in 2024, so that combined represented $440 million of one-off amounts paid and reported in our cash flow statement as a lease liability repayment, because actually from an accounting perspective, this is what it is, so those will not be repeated obviously in 2025, leaving aside the $90 million or $100 million that I talked about on the two vessels that we’ve announced we would purchase from the vessel owner that is chartering those ships to us today. We will see--so you should expect to see in 2025 a reduction from this $2.5 billion, $2.6 billion that we incurred in 2024, both because of the one-off that is not happening and, two, an additional--an incremental cash saving from a cash flow, or cash outflow perspective due to the fact that we are letting go in a way the more expensive tonnage, and if we do replace some of the 28 ships that we have up for renewal in 2025, it is more likely than not that the rates that we would secure would be lower than the one we are currently paying, as most of those charters were secured in 2021 - 2022 during the height of the COVID days and the height of the charter market. By and large, we will see in 2025 when compared to 2024 a reduction on our lease liability repayment coming from two elements, the one-offs in ’24 that are not going to repeat themselves in ’25 and also the fact that we continue to benefit from the lower chartering rate of our new tonnage, and possibly of the tonnage that we will renew in the period.

Okay, thank you very much.

Your next question comes from the line of Omar Nokta from Jefferies. Your line is now open.

Thank you. Hi, good afternoon Eli and Xavier. Just maybe wanted to follow up, I have a couple questions. Maybe just first on the last point, Xavier, you were just making in terms of the lease payments for ’25, does that mean if it was $2.5 billion to $2.6 billion last year, is that something like 1.7, 1.8 this year, assuming maybe half of those vessels rolling off, you extend them at today’s market rates? Does that sound in the ballpark?

It would be clearly below the $2 billion mark, that’s for sure. Whether we’re going to be 1.8, 1.7 remains to be seen, but clearly below $2 billion, yes.

Okay. All right, thank you. Then you had mentioned in your opening comments that you’re approaching that 4 million TEU run rate per year. In terms of--and you mentioned being able to maintain that. What is behind that in terms of the vessels coming up for renewal? Is that assuming that of those 26 ships that roll off this year, that half will be extended and the other half returned?

Yes, maybe Omar, to help understand that, let’s look at what happened in 2024. In 2024, we increased our operating tonnage from 640,000 TEUs at the beginning of the year to close at 780,000 TEU at the end of the year, and we added capacity month after month throughout 2024 as we received more tonnage that we delivered existing tonnage, so 140,000 TEUs of incremental tonnage between the beginning of--operating capacity between the beginning of 2024 and the end of 2024. That allowed us to come to deliver on the volume story that you rightly highlight, that allowed the company to move 14% more boxes in 2024 compared to the prior year 2023. Now when we look at 2025, our starting point is 780,000 TEUs worth of capacity, and with those 90,000 TEUs, give or take, of tonnage that are up for renewal. If we were to let go all of that tonnage, we would end the year with an operating capacity that would be close to 700,000 TEUs, so still quite significantly more than what we started 2024 with. That’s why we’re saying that we feel confident that we will be able to continue to grow our carried quantities with the capacity that we intend to operate in 2025, even though as of yet we still maybe not have made final decisions when it comes to the renewal of all or some of these 28 ships that are coming up for renewal in 2025.

Thank you, that’s quite helpful. Then just a final one, and this is a bit more big picture strategically, maybe, just about the business, you were discussing the USTR proposal, and it’s still early in terms of figuring what that all means; but you did mention that some of the complexity that’s now involved if it were to go through in terms of servicing different ports and different customers in various areas, how are you thinking about ZIM, I guess going forward? You’ve operated obviously long term as an independent ocean shipping company. Any plans or thoughts in terms of diversifying into related businesses that are either tangential or within the logistics as a result, especially given how significant your cash position is?

Look - I think the number one priority of the company continues today to ensure that we continue to position ourselves for the longer term as a very highly competitive ocean player. We’ve done a series of--or we’ve taken a series of decisions and implemented a series of actions throughout the past four or five years, starting with the renewal of our fleet, starting also with the collaboration with the 2M back in 2018, with MSC now as the 2M did--you know, got dismantled, so we are very well positioned. We are commanding significant market share on the key trade where we decide to focus our attention. Just also to emphasize or re-emphasize on the Asia - U.S. east coast, we command a market share close to 12%, and despite the fact that ZIM globally only commands 2.5% of the global shipping market. On the trades where we compete, we are strong and we are a big competitor. The partnership with MSC on the U.S. east coast trade is a pure swap agreement, so we’re bringing as much capacity as MSC and we both enjoy sharing slots on board each other’s vessels. We’ve been very active in ensuring also that we differentiate ourselves with our LNG proposition. We were one of the first shipping lines to aggressively, I think, order new build LNG tonnage. Today, we just talked about the composition of the fleet - out the 780,000 TEU of capacity that we operate, 40% of that capacity is LNG powered. We are the only shipping line having two services between Asia to the U.S. east coast, so we’ve built, we believe, a strong brand. We get the recognition from our customers that transpires in our ability to capture additional volume, as we just talked about generating more than 14% volume increase in 2024 versus 2023. Now all the uncertainties that you are referring to ahead of us will affect the whole of the industry. We feel strong about the fact that we now have the right tools and we are very well positioned to navigate those uncertainties in the months and in the quarters to come, so I don’t think that all those elements we need to keep in mind and consider are of a nature to divert our focus and attention away from our core shipping activity. We said that we, on top of this core shipping ocean liner strategy that we have and execute on, we continue to look at investing and diversifying some of our activity towards digital initiatives, and we named a few in this respect - we will continue also to do that. But short answer, after maybe a long one, is we think that in the foreseeable future, the focus should continue to be on our core shipping business.

Well said, thank you Xavier. Appreciate your comments.

Your next question comes from the line of Alexia Dogani from JP Morgan. Your line is now open.

Hi gentlemen, thank you for taking my questions as well. Just very firstly, you talked about the anxiety that customers are facing very near term, but can you talk a little bit more about the very current rates we’re seeing and activity in February, because we’ve noticed a quite material drop in spot rates in February and it’s not very clear what is driving that, given the Red Sea remains closed, so any comment there would be great. In that context, if you can give us a little bit of a rough evolution of rate over the next 12 months, you know, if there is seasonality and what your assumptions are on that basis? Secondly on the fleet composition, I remember when you came to market, one of the unique selling points was your agility and the fact that you had very few vessels or capacity on longer term charters. Obviously that balance massively switched during COVID because of the constraints to secure capacity. Are you considering again to go back to much shorter charter durations, to bring back some of that agility you had prior to COVID, and can you help us understand in which scenario would you actually consider shrinking your asset base? Obviously you’re telling us over the next three years, you have scope for a 20% reduction assuming you don’t renew any of these vessels that are coming up for renewal. Is that a scenario you are considering as a team? Then just a very quick one, it’s good to see that you chose to buy some vessels. Why didn’t you consider to buy more and instead kind of continued to pay the dividend that clearly is quite expensive, if I think about the yield it trades on? Just trying to understand the capital allocation there. Thank you.

Thank you Alexia. Quite a few questions here. I’m going to try to take them one after the other, if you allow me. Maybe starting with the third one, you were talking about the fleet and the agility that was one of the arguments that characterized ZIM at the time of the IPO. At the time of the IPO, you are right in saying that we were very much exposed to the short term charter market - we operated very little tonnage that we owned, and we were very not exposed to the long term charter. That was an element of differentiation for ZIM. The agility of yesterday, or the drivers for the agility of yesterday are not the same for the agility of today and tomorrow, and our market and our industry landscape changed significantly with the COVID years of 2021 and 2022, and relying on the short term charter market was a strategy that could work up until--and worked pretty well, by the way, for ZIM up until ’21, including by the way ’21, ’22. After, we felt that clearly we had to change this strategy and make sure that we locked for the longer term our core capacity, because we would otherwise run the risk to no longer have access to the right vessels. As we also changed our commercial strategy and network strategy, opening up to partnering with other shipping companies, with 2M as we discussed earlier on, we wanted to make sure that we continue to upscale and generate economies of scale, and the higher in terms of size you go in the charter market, the less you have availabilities in terms of vessels, so clearly we changed that and this is what triggered the fleet transformation program that we initiated back in 2021 and…

Thanks, and sorry - can I just ask a very short follow-up? In your guidance comments, you basically expect stable operating capacity, and therefore we should expect all leases up for renewal will be renewed to get to stable operating capacity. Is that right?

No, maybe we were not clear enough here. What you should assume is that the capacity that we operated throughout 2024 will be pretty much the same as the one we will operate throughout 2025, maybe a bit less. Like I said, maybe Omar I think had the question earlier on, we grew by 140,000 TEUs of capacity between--over the 12 month period of 2024. If we were to let go all of the ships in 2025, we would--that we have available, those represent only 98,000 TEUs worth of tonnage, so de facto we would be operating more tonnage in ’25 than in ’24.

Okay, all right. Thank you.

This concludes our Q&A session. I’d now like to hand the call back over to Eli Glickman, President and CEO of ZIM.

Thank you. In summary, ’24 was an outstanding year for ZIM highlighted by our best results ever, excluding the extraordinary COVID period. We made important operational progress upscaling our capacity, which resulted in three consecutive quarters of record carry TEU and 14% volume growth for the year, far outpacing the market. Our strong earnings in ’24 allowed us to share our success with several dividends paid to shareholders throughout the year. Including today’s dividend, our total payout on account of ’24 results is $7.98 per share or $961 million, representing approximately 45% of our net income. I want to thank our employees globally for their contributions in making this performance possible and their steadfast commitment to achieving the highest operational standards and delivering an exceptional level of service to our customers. As we enter 2025, our business environment is fraught by an unusual degree of risk and unknowns, yet with a transformed fleet of modern, cost and fuel efficient capacity, 40% of which is LNG powered, we are confident that we continue to leverage our agility and implement our differentiated strategy. We are in a strong competitive position in our industry and are well positioned to navigate the external uncertainties. Thank you again for joining us today. We look forward to sharing our continued progress with you all.

Thank you for attending today’s call. You may now disconnect.