Zim posts stronger second quarter as Hapag-Lloyd deal remains in limbo
Zim's revenue rose 9% to $1.78 billion and adjusted EBITDA reached $491 million, but the company's proposed $4.2 billion sale to Hapag-Lloyd and FIMI still faces significant regulatory hurdles in Israel.
Zim reported a sharp improvement in second-quarter profitability on Wednesday, with revenue rising 9% to $1.78 billion and net income increasing 170% to $64 million, as higher freight rates and stronger volumes on the Pacific trade helped offset weaker performance elsewhere.
The results come as Zim remains in the middle of a proposed $4.2 billion sale to Hapag-Lloyd and FIMI, a transaction that has already been approved by Zim shareholders but is still awaiting regulatory approval in Israel. The company said the parties continue to fulfill their obligations under the merger agreement and engage with authorities, with the deal currently targeted to close in the fourth quarter.
Zim's adjusted results, excluding costs related to the pending transaction, were stronger still. Adjusted net income rose to $77 million from $24 million a year earlier, while adjusted EBITDA increased 4% to $491 million. Free cash flow reached $386 million during the quarter.
The improvement was driven in part by higher freight rates. Zim carried 922,000 TEUs in the second quarter, up from 895,000 a year earlier, while its average freight rate rose 8% to $1,590 per TEU.
The strongest growth came in the Pacific trade, where volumes increased to 426,000 TEUs from 354,000. Intra-Asia volumes also increased, while volumes in the Atlantic, Latin America and Cross-Suez trades declined.
Despite the stronger quarter, the first half of the year remained substantially weaker than the same period in 2025. Revenue fell 13% to $3.18 billion, adjusted EBITDA dropped to $804 million from $1.25 billion, and Zim recorded a net loss of $22 million compared with net income of $320 million a year earlier.
Adjusted net income for the first half was $4 million, compared with $318 million in the first half of 2025.
The company is nevertheless forecasting a significantly stronger second half. Zim maintained its full-year guidance of $2 billion-$2.4 billion in adjusted EBITDA and $700 million-$1.1 billion in adjusted EBIT.
If it meets its current full-year guidance, Zim said its board could consider declaring a dividend based on 2026 results. Any dividend would remain subject to the board's discretion, Israeli law and restrictions under the merger agreement with Hapag-Lloyd.
The company's financial position also improved during the quarter. Net debt fell to $2.77 billion at the end of June from $2.93 billion at the end of March, while its net cash position, excluding lease liabilities, stood at $2.46 billion.
Zim generated $657 million in operating cash flow during the first half, compared with $1.3 billion in the first half of 2025. Capital expenditure was relatively limited at $43 million, while the company paid $106 million in dividends and $781 million in debt service during the period, mostly related to charter vessels and equipment lease liabilities.
The earnings report comes at a particularly consequential moment for the company. Under the proposed transaction announced in February, Hapag-Lloyd would acquire Zim for $35 per share in cash. Zim shareholders approved the deal in April, but the transaction remains subject to regulatory approvals, including approval by the Israeli state under the requirements of its special state share, or golden share.
The regulatory process has become increasingly uncertain. The eight government agencies involved in reviewing the transaction are now expected to meet on September 9, after a meeting originally scheduled for earlier this month was postponed. A majority of the agencies are expected to oppose the transaction, according to information previously obtained by Calcalist.
The Shipping and Ports Authority has maintained its opposition despite additional information submitted by Zim, Hapag-Lloyd and FIMI. Its concerns include the proposed structure of a new Israeli Zim, its dependence on Hapag-Lloyd and whether it would remain sufficiently independent to meet the obligations attached to the state's golden share.
The buyers have proposed separating Zim's Israeli activities into a new company that would operate 16 ships and begin without debt. They have also committed to establishing a new Israeli regional division, a technology center employing hundreds of people and maintaining employment and other operations in Israel.
Zim did not hold a conference call for its second-quarter results because of the pending transaction.
