Ferries dispute hits ICG as 2005 reveals €14.8m loss

THE Irish Ferries dispute and associated rationalisation costs plunged Irish Continental Group into losses of €14.8 million before tax in 2005.

That compared to profits of €5.5m in 2004. The restructuring charge of €29m involved the redundancy package in Irish Ferries, where Irish workers have been replaced by cheaper foreign labour.

At the time the group said the industrial dispute linked to the job losses cost the group an additional €5m in lost earnings as sales revenue grew by just over €5m to €298.7m for the group as a whole.

Operating profits were well down from €23.3m to €19m, with fuel costs jumping from €20.3m to €29.2m over the 12 months to end December 2006.

Weak tourism markets, coupled with the industrial dispute of late 2005 and higher fuel costs of €8.9m, were blamed for the sharp reversal of fortunes in the group during the year.

Those setbacks more than offset growth in the freight market and a strong performance by the container and terminal division.

Earnings per share before exceptionals of €29.1m fell 23.9% to 57.9 cent from 76.2c. Shares in the group rose 15c to €12 in early afternoon trading well up from the €10.10 they hit during the strike action that followed from the controversy created by the Irish Ferries redundancy plan.

Turnover is ICG’s ferries division dropped only marginally to €162.7m from €164.3m while profits pre-exceptionals fell from €20.8m to €14.8m for a number of reasons.

Fuel costs rose by 44% while passenger numbers fell 6.6% to just under 1.5 million.

Car journeys dropped 4.5% to 366,000, as low-cost airlines continued to hit the sector.

Freight did better with roll-on roll-off freight volumes rising 3% in a very tough market, the company said.

The company hopes to save €10m a year by using agency workers to crew its vessels, and confirmed a significant number of staff have already left the group.

In the container and terminal division, turnover rose from €129.8m to €136.4m, while profits increased from €2.5m to €4.2m. Container volumes were down 8% over the year.

ICG said markets were “extremely competitive” but trading so far in 2006 was “satisfactory.”

Chairman John McGuckian said the group was forced to take resolute action to cut costs in an increasingly competitive market.

“We are confident we have taken a major step forward in reducing our cost base, which underpins our ability to serve our customer base and which will give us the ability to compete effectively in 2006 and beyond,” he said.

Analysts reacted positively to the figures. NCB said it was maintaining its earnings target for 2006.