Low fuel powers Irish Continental Group ferry revenues

Ferry and freight services business Irish Continental Group (ICG) expects to see continued earnings and revenue growth this year on the back of low fuel prices, but will also see revenues suffer slightly due to the current weakening in sterling.

Low fuel powers Irish Continental Group ferry revenues

The Irish Ferries owner yesterday reported a 10.5% increase in group revenues, to €320.6m, for 2015 with earnings (on an earnings before interest, tax, depreciation, and amortisation basis) up by 49.5% to €75.5m and operating profit ahead nearly 75% at €57.2m.

Basic earnings per share were down by nearly 5% at 28.9c and pre-tax profits slipped from €56.7m to €54.1m.

Management said that lower fuel prices will continue to help performance but added the weakening in sterling “will affect the euro value of UK-originating revenues”.

A strong UK currency, last year, boosted ICG’s business, with passenger growth of 2% (to almost 1.7m people) and roll on/roll off freight volume growth of nearly 10% noted.

However, momentum has carried over into the early part of this year, with trading conditions staying “favourable” and that is expected to remain the case.

“The group maintains a pivotal position in facilitating Ireland’s international trade and tourism and is operationally geared to the economic recovery in Ireland.

"We have seen the benefits of this recovery continue into the early weeks of 2016 which, notwithstanding a weakening in sterling and assuming current oil prices, gives us confidence that we can look forward in 2016, in the absence of unforeseen developments, to further growth in revenue and earnings,” said chairman John B McGuckian.

The Irish Ferries division increased revenues by 10.6%, last year, to almost €204m.

First-half revenue was up over 11% while sales in the second half of the year grew 10% on an annualised basis.

The lower fuel price environment and passenger revenue drove a €20m increase in earnings to €63.7m.

Last year ICG’s fuel cost was 26.4% lower than the previous year at €39m.

However, the benefit of lower costs was partially offset by a strong dollar versus the euro, EU environmental regulations requiring it to consume more expensive fuel grades and the passing on of cost reductions to freight customers via a fuel- adjustment mechanism.

The group lowered its net debt nearly 28% to €44.3m.

That debt is now just 0.6 times earnings, as management used free cashflow to bolster the balance sheet.

Analysts see that strong balance sheet now offering management the flexibility to make acquisitions, buy back shares and/or raise dividend payments further, even after a 5% rise last year.

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