Ferries row ‘to cost firm €11m’

IRISH FERRIES’ row over the replacement of its Irish workers could cost up to €11 million in lost profits in the current year, its parent warned yesterday.

Irish Continental Group (ICG) told the stock exchange profits for 2005 would be “substantially below” market expectations at the pre-exceptional level. Shares in the company tumbled during the day and were down 2.95% at €10.19 in late afternoon trading.

Last year the group made profits before interest and exceptionals of €23.3m and markets had been expecting a figure of around €25m for the current year before the controversy.

ICG blamed the dramatic shift in the outlook on the disruption to services caused by the dispute at Irish Ferries.

SIPTU, the country’s largest trade union, and Irish Ferries management have been locked in a bitter dispute since last month over the company’s plans to outsource jobs and sail its ships under flags of convenience.

Irish Ferries vessels have been held up at ports here and in Wales since then, after management brought a replacement crew of eastern European workers on board two of its ships.

ICG said the interruption to services had so far cost it €5.5m, and that this would rise to €11m if services failed to return before the year end.

In 2004 profit before tax sank from €17.7 million to €5.5m.

Sales fell from €305m in 2003 to €294.1m as tougher competition and rising costs undermined its overall performance.

This year the markets have been expecting the group to achieve pre tax profits in the region of €20m, until the latest stand-off with the unions took hold and disrupted services.

Last March, when the group published its full year figures for 2004, chairman John B McGuckian said the year had seen “extremely difficult competitive conditions.”

“We have taken resolute action to reduce our costs,” Mr McGuckian said. “We are committed to addressing our cost base going forward. This has cost us both in terms of exceptional charges and income lost through industrial action“, he said.

That was a start in reducing the future cost base and to give it the ability to compete effectively in 2005 and beyond, he said.

Last year the group faced exceptional restructuring charges of €11.9 million.

That covered redundancy costs of €8.2m for the crew of the Ireland-France vessel Normandy and other restructuring costs of €3.7m involving onshore activities.

Should the current dispute continue to the year end then the group stands to be down a total of €11m, which will be a further blow to the group’s drive to boost its eroding earnings base.

How that will translate to the bottom line remains to be seen but with €5m already lost in earnings the outlook for the current year now looks extremely bleak, according to the update.