Irish Continental Group’s share price recovery continued yesterday with a near 3% gain on the back of the Irish Ferries owner announcing a €144m deal for its first newly built vessel in 15 years.
The group has entered into an agreement with German shipbuilding firm Flensburger Schiffbau-Gesselschaft (FSG), which will build a cruise ferry at a contract price of €144m, with a delivery deadline of May 2018.
ICG will pay 20% of the purchase price in instalments during the construction period, with the remaining 80% due to be paid on delivery.
The new vessel will take to five the number of ships ICG has under its Irish Ferries brand. It also has three out on charter to third parties; including a catamaran it recently acquired for nearly €12m which is used by the US Marines on a long-term contract.
The new ship — which will accommodate 1,885 passengers and crew, with 435 cabins and capacity for 300 passenger cars and 2,800 lane metres of freight — is the first new build addition to the Irish Ferries fleet since the Ulysses in 2001.
It will be used on both the Dublin-Holyhead mid-week route and the Ireland-France weekend schedule.
“Strategically, the new build brings a vessel that meets the needs of the routes it serves; brings greater flexibility to the current fleet by allowing the fast ferry [the Jonathan Swift] to be parked during the seasonally weak winter period and at the same time extend its operational life by at least five years; allows ICG to grow volumes beyond 2020 when current capacity would become constrained and the balance sheet is not compromised, thereby maintaining financial flexibility,” said Jack Diskin at Goodbody Stockbrokers.
The move could also add €14m to earnings beyond 2020 and deliver €11m in recurring savings from not chartering the Epsilon vessel and laying up the fast ferry in the winter.
ICG’s share price rose by just under 2.9%, yesterday, to €5.40; nudging back towards its January high of €5.60.
“We view a new build ferry as an opportunity to underpin the group’s medium-term earnings and further consolidate its leadership position on the Irish Sea,” said Stephen Furlong of Davy Stockbrokers.
“With Ireland still in recovery mode in freight and tourism, we believe ICG is well-placed for this growth.”
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