Ferry group warns of rising fuel costs but still ‘confident’

Irish Ferries owner Irish Continental Group has warned of the effect of rising fuel costs on its balance sheet but remains “confident” about its prospects.

The ferry and freight services group — which also owns the Eucon and Feederlink businesses — saw its fuel bill rise by 26% to €52.1m last year.

The group yesterday reported financial results for 2011, which represent what management called “a solid performance”, with revenue up 4.2% at €273.3m.

While still profitable, pre-tax profits fell by 30% to €28.2m and operating profit was down more than 8% to €28.9m.

Basic earnings per share fell by 29% to 111.1c; earnings before interest, tax, depreciation and amortisation were down by 8.4% to €49.1m; there was a near 24% rise in the group’s net debt position to €7.8m; and an 85.7% increase in its net pension deficit to €32.5m.

ICG chairman John McGuckian said the group had shown a “solid performance” in generating such profit figures, despite the fuel bill increases.

“The current year will be challenging, as fuel costs have further increased, but with our disciplined approach to capacity, I am confident of the group’s prospects,” he said.

Mr McGuckian said management’s focus continues to be on cost reduction — although job losses are not planned — and improving the group’s level of cost leadership within the industry.

“We continue to have a strong balance sheet, with strong cash flow — which is unique in our sector,” he said.

Turnover was up in both of ICG’s main divisions — by 8.5% to €119.1m in its container and terminal division and by 1.2% to €155.5m in its ferries business.

Irish Ferries also saw a 1% rise in total passenger movement between Ireland and Britain following a tough 2010, when a 9% decline was witnessed.

However, additional benefits — such as new users due to the previous year’s ash cloud disruption to air travel — didn’t occur, while continued poor consumer sentiment levels didn’t aid business.

“Austerity programmes in both markets affected discretionary spend, which led to further downward pressure on passenger volumes,” Mr McGuckian said.

He noted the termination of the Cork-Swansea ferry service and the likelihood of “a number of other marginal operators on the Irish Sea” continuing to lose money and address capacity.

Colm Foley of Goodbody Stockbrokers said while Cork-Swansea wasn’t a dir-ect competitor (Irish Ferries has about 40% of the pass-enger market on the Rosslare-Pembroke route), the move may have a positive knock-on effect for ICG.