ICG's shares rise after spare cash used to halve its debt
Published 24/03/2010 | 05:00
Irish Continental Group's (ICG) shares rose yesterday as the group used its spare cash last year to more-than halve its debt pile to €21.7m, even as its operating profit was hit by the slump in economic trade.
The ferry company said that the economic environment in 2010 "remains challenging" after posting a 36.6pc drop in operating profit to €26.5m as revenues dropped almost a quarter to €260.5m.
Still, group chairman John B McGuckian said that the Irish Ferries operator is "well-placed to compete vigorously in this tougher environment".
He said the ICG's operational leverage -- effectively a high rate of fixed costs -- means it will benefit from a resumption of trade growth. Shares in the group ICG added 3pc to close at €15.90.
"Last year was characterised by a very weak first six months, as the effects of the credit crisis and weakening world trade took effect," said Mr McGuckian.
The second half saw an improvement in trends, with the year-on-year rate of reduction in roll-on-roll-off (RoRo) freight volume easing to 15pc from 22pc in the first six months.
Declines in load-on-load-off (LoLo) container freight volumes improved to 19pc from 32pc in the first half, while the number passengers and cars carried by its ships swung back into positive territory.
The chairman said 2009 "provided the most challenging trading conditions seen in Ireland for many decades.
"World trade suffered as a global recession took hold while Ireland experienced a reduction in economic activity significantly greater than many of our trading partners."
ICG managed to pare its net debt back from €48.7m to €21.7m, largely as it limited capital expenditure to €4.8m -- well below its depreciation charge of €24.2m. The group's debt is at its lowest level since 1993.
"The company notes a 5pc reduction in the overall RoRo freight market so far this year, as sharp declines evident in 2009 abate. It says LoLo volumes are up 6pc and car volumes are flat," said Bloxham Stockbrokers.
"These figures are reassuring and should stabilise further as the year progresses."
Liquidity in ICG shares has improved substantially since troubled developer Liam Carroll's 29.3pc stake in the company was placed on the market last November -- in a deal overseen by Allied Irish Banks, which bankrolled his stakebuilding in the group in 2007.
The sale only raised €87.8m -- half the amount that AIB is understood to have lent Mr Carroll to acquire his holding.
ICG said yesterday it plans to pay a dividend of €1 a share to investors, which will particularly benefit members of the so-called Moonduster consortium, which built up a stake in the group in 2007 and was involved in two abortive attempts to acquire it. This is equivalent to a dividend yield of between 6pc and 7pc.