Modest growth at ICG as profit rises 18.3%

THE shipping and transport group, Irish Continental, has recorded modest growth with an 18.3 per cent rise in pre tax profit from £9.3 million to £11.0 million in the year ended October 31st 1995. The profit growth is a little below market expectations.

However, the underlying trend is better. While the profit on the disposal of assets went up from £0.5 million to £1.1 million, it had to contend with lower profits from associates and an exceptional cost of £0.4 million incurred in gaining access to Brittany. If these are excluded, then ICG pushed its operating profit up by 21 per cent.

Shareholders are to receive a good boost in their dividend income. The final dividend is being raised from 2.4p to 3.0p, making a total of 4.5p, or 25 per cent higher than in the previous year.

The profit growth came from the ferries division. The container and terminal division had a standstill year.

Overall sales slipped from £116.8 million to £116.4 million. This contraction was due to a fall in sales from £88.9 million to £84.5 million in the ferries side following the withdrawal from the low margin freight joint venture on the Dublin to Liverpool route.

This masks a healthier trend as all the contraction in sales occurred in the first half while sales in the second six months rose from £57.3 million to £60.0 million as the group started to benefit from the introduction of its new vessel on the Dublin to Holyhead route. Profit before interest, in the ferries division rose from £9.5 million to £11.9 million, reflecting the better margin business.

Passengers on the Ireland to Britain routes grew by 2.3 per cent to 1.12 million. There was a contrast in the performances in the first and second half years. The first half had a decline due to a disruption while the second half experienced a growth of 9.3 per cent. The increase for the 12 months, said chairman, Mr Tom Toner, was achieved in the difficult British market.

The Ireland to France routes experienced a 5.6 per cent contraction to 0.25 million in the number of passengers carried due to weak consumer demand in Continental Europe. This occurred despite a 7.8 per cent increase in traffic originating in Ireland.

There was good growth in the freight side. The added deck capacity on the Isle of Innisfree allowed the group to generate a 21 per cent increase to 63,000 in freight units carried by Irish Ferries but there was a reduction of from 14,000 to 4,000 in the roll on roll off units place on third party services, Mr Toner said. The charter of the Pride of Bilbao to P&O European Ferries has been extended for a further 21 months in January 1998.

While the profit before interest in the container and terminal division was unchanged at £2.6 million, sales grew from £29.7 million to £34.9 million "as the division developed a number of new and services", according to Mr Toner. The division launched a new fast container vessel and the number of units carried increased by 25 per cent.

Group earnings per share rose from 40.2p to 42.7p, broadly in line with brokers predictions for earnings. ICG continues to be a strong cash generator with cash flow from operations going up from £17.7 million to £21.2 million. However, net investment amounted to £32.2 million - £26.2 million was the final payment on the Isle of Innisfree. The gearing rose from 55 per cent to 67 per cent. Interest is well covered at 4.8 times.

The group is optimistic about further growth this year. ICG's managing director Mr Eamonn Rothwell said the strong trend in last six months of last year is coming through this year.

The shares rose 5p to 475p yesterday (12 months high 555p low 380p) and are on a prospective pie of 8.6, assuming pre tax profit rises to £14.9 million this year.