ICG expected to weather choppy waters despite sinking profits
First half results for owner of Irish Ferries dampened by fuel costs and sailing cancellations
ICG had to cancel summer sailings of the WB Yeats, a new ship that it ordered from German shipbuilder FSG, because it was not ready on time
Ferry company Irish Continental Group (ICG) found itself in choppy financial waters this summer, thanks in part to a number of things that were beyond its control.
ICG had to cancel summer sailings of the WB Yeats, a new ship that it ordered from German shipbuilder Flensburger Schiffbau-Gesselschaft (FSG) last year at a cost of €144 million, because it was not ready on time for the peak season.
FSG ran into problems with a supplier early this year, slowing down work on the craft. The bottom line was that ICG had to spend an extra €7 million re-accommodating or compensating passengers.
The seas grew rougher still in June when problems erupted with a propeller on ICG’s flagship, the Ulysses, forcing the group to cancel some its sailings, at a cost of €6 million.
Its annual accounts, due early next year, will show the final bill for the cancellations. Their impact was only really felt in the summer, which fell into the second half of the year, rather than in the first six months of 2018, the period covered by the results ICG published this week.
Other factors also dampened the first-half results, which showed a 46 per cent fall in profits to €29.7million, when the group published them on Thursday. Fuel costs rose €2.8 million to €22.4 million, while charter income was down, a result of ICG’s decision to sell the Kaitaki and the Jonathan Swift.
However, ICG is far from holed below the water line. In fact, analysts believe the problems that swamped its first half will turn out to have been temporary. It has plenty of cash, balances rose more than €15 million to €54.6 million, while it borrowed €72 million from the European Investment Bank at extremely low rates to pay for a second new ship that it has ordered from FSG.
While passenger and car numbers were down, roll-on, roll-off freight was up, as was the volume of business in its Dublin and Belfast port operations. Stephen Furlong and Ross Harvey at stockbrokers Davy rated the stock at outperform, on the basis that its long-term strategy will pay off.