During the third quarter, Zim, the Israel-based container shipping company, had a net loss of $44 million, down from a $97 million loss in the second quarter of this year. A year earlier, the company banked a $16 million profit.
Zim, which is part of the Israel Corp. conglomerate, is undertaking a restructuring, which the company said has not impacted services.
"There has been no deterioration in the company's performance," it said.
"The logic behind the restructuring is very simple. We are downsizing the balance sheet in a way that will reduce debt and convert it to equity," said Rafi Danieli, the chief executive officer of Zim. He said the company would not be downsized as a result of the restructuring.
He said the company is seeking to be transparent with the restructuring and held a recent meeting in Barcelona with stakeholders.
Zim said "once the restructuring is completed and approved by all stakeholders, including the General Assembly of the Israel Corporation, there will be a significant improvement in the capital structure.”
Israel Corp. owns 99.66 percent of Zim. Israel Corp. said in June it is looking the possibility of splitting the company in half, with its chemical and oil refining operations in one company, and Zim and other subsidiaries in another. Danieli said that would not affect the restructuring of Zim; "We will be either part of Israel Corp. A or Israel Corp. B," he said.
The restructuring would reduce Israeli Corp.'s equity stake in Zim, as debt holders receive equity in the company.
Zim said it has “completed intensive negotiation sessions with representatives of all stakeholders this month and achieved significant progress toward a restructuring that will provide long-term stability in face of the many challenges ahead and the changing market conditions.”
Zim recorded an operational profit of $17 million in the third quarter of 2013, compared to an operating profit of $80 million in the same 2012 period and an operational loss of $29 million in the second quarter of 2013.
EBITDA (earnings before interest, taxes, depreciation, and amortization) was $56 million in the third quarter, compared with $125 million in the third quarter of 2012 and $12 million in the second quarter of 2013.
Revenues in the third quarter of this year were $900 million, compared with $1.06 billion in the same 2012 period and $976 million in the second quarter of 2013.
Zim carried about 640,000 TEU during the third quarter, up from 617,000 TEU in the third quarter of last year, and two percent more than the second quarter of 2013.
Revenue per container was $1,202 in the third quarter of this year, down from $1,444/TEU in the third quarter of 2012 and down from $1,246 per TEU in the second quarter of 2012.
“In spite of the improvement, the shipping market conditions are still challenging due to downward pressure on the freight rates and the continued uncertainty in the global economy," the company said. "To tackle these challenges, Zim continues to initiate internal efficiency measures.”
Asked how Zim views the proposed P3 Network, Danieli said, "I would not exaggerate and say we are here cheering and enthusiastic about it. Obviously, like everybody in the industry, it is a big unknown for us, and we are still in doubt about whether it will go through legally in terms of all the antitrust laws around the world. It is probably much more complicated than first anticipated.
"Our main issue is that they do not go into a price war, which will further reduce market rates," he continued. "This is really what we need to monitor and assure that they (the P3) will not have only one place to fight and that will be around the price once all the services are equal. That is where our biggest fear is."
He said Zim is continuing a strategy begun in 2010 to be a bigger players where it is more dominant. He noted that Maersk and MSC are already big players in the Israel market, and that it appears CMA CGM has no plans to enter the Israel market.