DESPITE AN almost €10 million rise in fuel costs during the first half of 2008, Irish Continental Group (ICG) yesterday reported pretax profits for the period of €17.5 million, turning around a loss of €1 million for the same period last year.
The loss in 2007 was largely due to a once-off charge of €16.5 million because of expenses incurred in the takeover battle involving rival Aella and Moonduster consortiums.
However, the rising cost of fuel made it "inevitable that prices, for both passenger and freight, will have to rise", the group said.
Fuel bills jumped 64 per cent to €24.9 million in the first half of the year from €15.2 million in the year ago period.
The group also intends to review Irish Ferries' schedule for the Jonathan Swift fast ferry from Dublin to Holyhead, with a view to reducing frequency in the less busy winter season and thereby conserve fuel.
Revenue at ICG increased by almost 2 per cent to €166.1 million, while operating profits rose to €17.3 million compared to €16.4 million in 2007.
ICG reported an improvement in its basic earnings per share, which increased to 67.1 cent, compared with a loss of 6.8 cent, in 2007.
John Sheehan, an analyst with NCB Stockbrokers, said ICG's first half performance was "extremely resilient" given the increase in fuel costs and added that oil prices are less of an issue for ferries than for airlines. Overall, he said, the group's competitive position "remains strong".
During the period under review, ICG's ferries division operated 2,128 sailings, up 3.5 per cent on 2007.
However, the number of passengers travelling with Irish Ferries fell by 1.2 per cent to 681,000 compared to 2007, while total cars also declined, down by 2.3 per cent to 169,000.
As a result, revenue fell back for the ferries division by 2 per cent to €83.9 million, although profit increased by 13.9 per cent to €13.9 million. This was boosted by the sale of the MV Normandy, at a profit of €3.8 million. The ship has now been replaced with the MV Oscar Wilde, at an investment of €51 million.
Eamonn Rothwell, chief executive of ICG, said the fall-off in passenger numbers was due to the general economic slowdown and the decline in British holidaymakers because of the softening of sterling. However, he expects Irish Ferries to benefit from the difficulties airlines are currently facing, as passengers look increasingly for a cheaper option.
The overall Roll On/Roll Off freight market also slowed during the period, and Irish Ferries' volumes were down 3.1 per cent to 127,000 units, when compared with the first half of 2007.
Turnover in the container and terminal division grew by 6.3 per cent to €82.2 million, although profit declined, falling by almost 20 per cent to €3.4 million.
ICG paid down €14.2 million in debt in the first six months of the year, reducing its net debt to €70.3 million and Mr Sheehan expects to see "minimal" net debt at the group by the end of 2009.
