No end to Irish Ferries’ woes

RESOLUTION of the deeply divisive dispute at Irish Ferries does not mean an end to the carrier’s woes, according to stock market analysts.

On its own admission the dispute has cost owners Irish Continental Group (ICG) €5 million in lost profits that will cut earnings per share from 81 cents to 60c in the current year.

Outsourcing will proceed as planned under the terms of the agreement forged in the early hours of yesterday morning, with the Irish minimum wage slated to be paid to agency workers.

According to the company’s brokers, NCB Stockbrokers, ICG will have to pay between €25m and €30m to the 90% of workers opting for the eight weeks redundancy package.

Those who remain have agreed terms and conditions, but the company’s key demand of outsourcing goes ahead as planned.

Earlier this week the company estimated the impact of the disruption of services at €5.5m.

Christmas 2005 bookings are understood to have been severely hit by the events of recent weeks as customers went elsewhere to secure their travel and freight arrangements.

In 2006, it is reckoned also that the adjusted EPS target of 88c will be delivered provided the group can adapt to the rapidly changing environment in which it finds itself.

Weak tourism markets have been more than offsetting freight gains, while fuel costs have also been very problematic in the last 12 months or more. This has led to rationalisations in the sector across Europe.

Loss of business, as a result of freight not returning to the group’s routes for a period after the resolution of the dispute could also be a drag on earnings in the short term, analysts said.

Shares in the group rose by over 5% yesterday to €10.75 in late afternoon trading.

NCB has put a price target on the stock of €12 per share on the stock given the current circumstances.