Zim Integrated Shipping Services (ZIM 0.86%) reported a better-than-expected third quarter on Wednesday, and news of the company’s performance pushed its share price marginally higher. Double-digit gains during the trading session moderated toward the close, but the stock ended the day with a nearly 1% increase. That compared favorably to the flat line that was the S&P 500 (^GSPC 0.40%).
A very memorable quarter
It was a beat-and-raise quarter for Zim, which saw its revenue more than double year over year. It landed at $2.77 billion, against the $1.27 billion of third quarter 2023. This was on the back of a 12% rise in carried volume, and a powerful 177% improvement in the logistics company’s average freight rate.
The change on the bottom line was even more dramatic, with Zim flipping hard into a net profit of $1.13 billion ($9.34 per share) from the $2.27 billion loss in the year-ago period.
The company also declared its upcoming dividend. This will consist of a regular payout of $2.81 per share, combined with a $0.84 special dividend, for a total of $3.65 per share. This is to be dispensed on Dec. 9 to investors of record as of Dec. 2.
Management attributed the vast improvements in fundamentals to the addition of newer, larger ships to the company’s fleet. Zim has also benefited from a general rise in demand for ocean shipping, its specialty.
Guidance raised
On the back of those vastly improved fundamentals, Zim raised its earnings before interest, taxes, depreciation, and amortization (EBITDA) guidance for both its current (fourth) quarter and the full year. For the latter period, it anticipates that non-GAAP (generally accepted accounting principles) adjusted EBITDA will come in between $3.3 billion and $3.6 billion.
It wasn’t immediately clear why investors cooled on Zim after that early-share price pop on Wednesday. They might be concerned, sensibly, that the future of ocean shipping generally is somewhat murky, given the state of conflicts in certain hot spots — such as the Israeli company’s home region of the Middle East.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Zim Integrated Shipping Services. The Motley Fool has a disclosure policy.
