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Zim loses $445m less cancelling newbuilds than taking delivery

Zim lost substantially less through impairments for cancelling boxship newbuildings ordered at the top of the market than it would have taking delivery of the ships according Alphaliner.

The Israeli shipowner, which is undergoing restructuring, last week cancelled its remaining newbuilding orders for four 12,552 teu newbuildings at Samsung Heavy Industries (SHI) and four 8,800 teu newbuildings at Hyundai Samho.

The orders were made at the peak of the market in 2007 – 2008 and deliveries were subsequently delayed and then finally cancelled. Zim booked a $133m impairment loss on nine 12,552 teu newbuidlings cancelled at SHI, which included the four cancelled last week. While it will also book a $72m impairment loss on the cancellations at Hyundai Samho.

“Although Zim paid a heavy price for these cancellations, the loss would have been higher had they gone ahead to build the ships,” analysts Alphaliner noted in their weekly newsletter.

This is due to the sharp drop in newbuilding prices original total order price for all 13 newbuildings ordered at the top of market standing at $2.07bn.

“Prices for similar ships have dropped by 30-35% since the 2007-2008 peak and the full impairment charge on the 13 ships that Zim had cancelled would have been in excess of $650m, based on the original contract price marked to current market value,” Alphaliner said.

It noted the cancellations would pave the way for Zim to negotiate with yards for newbuildings at current prices.

 

 

 

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