ZIM Integrated stock: dividend at risk as shipping costs fall

ZIM Integrated stock price dropped to a key support level after the company published strong financial results. It retreated to a low of $17.30 on Friday, its lowest level since February 5. It remains about 27% below the highest point in 2024.

ZIM Integrated had a good year

Shipping companies had a great performance in 2024 as prices rose amid major challenges. One of the main catalysts was the crisis in the Middle East that forced shipping companies to use a longer route. 

Shipping companies also contended with low water levels at the Panama Canal, which has slowed the speed of passage. 

Recently, however, the industry is going through major challenges as the World Container Index dropped from almost $6,000 per 40ft container to slightly over $2,000. It has dropped by about 25% in the last 12 months.

Results released last week showed that the company’s revenue rose to $2.1 billion in the fourth quarter from $1.2 billion a year earlier. The annual revenue rose to $8.4 billion from $5.1 billion in 2023. 

This strong performance led to a big increase in its profits. Total net income rose to $563 million, a big increase from a loss of $147 million a year earlier. The total annual profit was over $2.1 billion.

ZIM’s 39% dividend may be at risk

ZIM Integrated’s profits are important to shareholders because the firm pays a part of it to shareholders through dividends. It paid $382 million in dividends in the fourth-quarter and about 45% of its profit to investors. It has a dividend yield of about 39%.

ZIM Integrated anticipates that the full-year adjusted EBITDA will be between $1.6 billion and $2.2 billion, while the adjusted EBIT will be between $350 million and $950 million. 

However, ZIM and other shipping companies often miss their estimates because they don’t have a say on prices, which is determined by supply and demand factors.

Recent data showed that the company’s shipping costs have continued falling this year. The popular Drewry World Container Index has dropped to $2,388, down from last year’s high of near $6,000. This means that the company’s revenue and net income will likely drop this year. 

The average estimate is that ZIM Integrated’s revenue will drop by 21% this year to $6.4 billion, followed by $6 billion next year. Also, the average earnings per share is expected to be $3.16, down from $3.96 a year earlier. A drop in profits means that ZIM will be forced to slash its dividends this year.

ZIM Integrated share price has also dropped as investors watch the ongoing trade war, which could affect the trade volume as costs rise. However, the management expects that the business will do well. In a note, Eli Glickman, the CEO said:

“While acknowledging that our industry is highly volatile, exacerbated by current uncertainty related to geopolitics, international political dynamics and economic, fiscal and monetary policies, we are confident in our agile approach and competitive position in the industry.”

The average ZIM Integrated stock price forecast is $15.7, down from the current $18.24. 

ZIM Integrated stock price forecast

The weekly chart shows that the ZIM share price has been in an uptrend, rising from a low of $5.17 in 2024 to the current $18.25. 

Most recently, the stock has formed an ascending channel that connects the lowest and highest levels since July last year.

The stock has moved above the 50-week moving average. Most notably, it has formed a hammer pattern, which is made up of a body and a lower shadow. 

Therefore, there is a likelihood that the ZIM stock price will rise and possibly retest the resistance point at $24. A drop below the support at $17.1 will invalidate the bullish view.

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