Cancelled ferry sailings led to ‘difficult’ summer for ICG

Cancelled sailings that left ferry operator Irish Continental Group (ICG) with a €13 million bill made trading during the peak summer period "difficult", according to company chairman, John McGuckan.

A fall in earnings from the sale of vessels almost halved ICG’s profits to €29.7 million in the six months ended June 30th, figures published by the company on Thursday show.

Commenting on the results, Mr McGuckan acknowledged that cancellations due to delays in the delivery of its new ferry the WB Yeats and problems with its flagship, The Ulysses, meant summer trading had been difficult.

Sailings cancelled as a result of the failure of German shipbuilder Flensburger Schiffbau-Gesselschaft (FSG)to deliver the WB Yeats on schedule in July cost ICG €7 million, most of it linked to re-accommodating customers.

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The company told the markets that cancelling scheduled sailings of the Ulysses cost it €6 million. Neither figure features in the first-half accounts as the difficulties hit mainly after June 30th.

ICG ordered a second vessel from FSG in January at a cost of €165.2 million. Last year it agreed to pay the German shipbuilder €144 million for the WB Yeats.

ICG said that revenue was €157.2 million in the first half of 2018 compared to €156.1 million during the same period last year.

Profit before tax fell 46 per cent to €29.7 million in the six months ended June 30th from €47.5 million during the first half of 2017.

The sale of the Kaitaki last year for €45 million boosted ICG's 2017 first-half profits. The group sold the Jonathan Swift in April for €15.5 million.

ICG included the gains from those sales under “non-trading items” which fell to €13.7 million in the first half of this year from €29.3 million in 2017.

The sale of the vessels resulted in a loss of charter income. This hit earnings, a measure of the cash a company generates, which fell to €26.1 million from €29.6 million.

Earnings per share fell 33 per cent to 15.3 cent in the six months ended June 30 from 22.8 cent in the first half of 2017. ICG intends increasing its interim dividend by 5 per cent to 4.21 cent a-share.

Stephen Furlong, analyst with Dublin stockbrokers Davy, said that ICG had left the choppy trading waters behind. "It's rear-view-mirror stuff," he said.

In a note issued after ICG published its first-half results, Mr Furlong and has colleague Ross Harvey upgraded the stock to "outperform". They stuck with a €6 target price for the ferry group's shares, which traded around €5.40 to €5.45 on Thursday.

The analysts pointed out that cash rose €15 million to €54.6 million. ICG borrowed €75 million from the European Investment Bank at 1.724 per cent over 12 years that will part pay for the second craft ordered from FSG in January.