Saturday 3 December 2016

Davy tipping ICG to 'sail through' Brexit wave

Published 15/07/2016 | 02:30

Davy has tipped Irish Continental Group (ICG) to "sail through" the effects of Brexit but has reduced its earnings before interest tax depreciation and amortisation (EBITDA) targets for the next two years, citing a cautious outlook on car volumes.

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The stockbroker has dropped its EBITDA target for the ferry operator for 2016 down to €85.2m from €90m. Despite Britain's decision to leave the European Union, Davy has kept its rating for ICG at outperform.

It announced in May that it would invest €144m in a new ship with a capacity for 1,885 passengers and 300 cars.

Davy analyst Stephen Furlong said the new ship represents "an opportunity to underpin the group's medium-term earnings".

"ICG is a high quality, industrial transport name with an enviable track record of best-in-class operating efficiency and optimal capital allocation.

"However, we are marking to market recent dislocation following the Brexit outcome for current exchange rates and fuel," Mr Furlong said in a note.

Last year the Irish Ferries parent, which is headed up by chief executive Eamonn Rothwell, generated around 20pc, or €69.5m, of its revenues from sterling point of sales.

ICG's share price was hit heavily following the UK's decision to leave the EU. The Irish company was among a host of firms involved in a bloodbath on the Irish Stock Exchange on the day after the Brexit vote.

Its shares dipped by 9.17pc in early trading on Friday, June 24. ICG shares stood at €4.60 at 2pm yesterday as it struggles to regain ground lost after the vote.

Analysts have tipped the company to become debt free in 2016. In the opening quarter ICG reduced its net debt to €25.9m from €44.3m.

Speaking at the company's annual general meeting in May, Mr Rothwell didn't seem overly concerned by a Brexit, saying preparing for such an event was "a waste of time".

He said that due to the uncertainty around the details of Brexit it wasn't possible to anticipate what the exit deal would look like.

Mr Rothwell, who recently ruled out retirement, made a profit of €4.43m on the exercise of share options and thier sale soon after last month. In December Irish Continental's market capitalisation exceeded €1bn for the first time, that has since dropped to €866m.

Irish Independent

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