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ICG warns investors over threat of rising fuel costs

Rising fuel costs present the greatest threat to ferry operator ICG, the company warned investors yesterday.

ICG, which owns the Irish Ferries brand, said in an interim management statement it was unlikely to be able to pass on all the increases in the fuel bill to customers this year.

Last year, its fuel costs rose by €10m, but ICG said it remained confident of eventually passing on all the fuel increases over time.

ICG also said that in the first four months of its financial year, although revenue climbed 2.4pc to €77.5m, earnings before interest, tax, depreciation and amortisation sank 35pc to €5.2m.

The decline was partially due to increased operating costs spurred by higher fuel prices.

Operating costs rose 6.8pc to €72.3m in the four months to May 14, with fuel costs having jumped 24pc to €15.3m.

ICG's pre-tax loss for the period was €1.2m. That compared with a €200,000 pre-tax profit a year earlier.

The number of cars carried by the group fell 1.4pc in the period to 96,700, with the lower numbers compensated for by higher yields, according to ICG.

Total passenger numbers were 6.5pc lower at 430,100. The first half of ICG's financial year is typically its weakest. In the corresponding period last year, ICG benefited from a surge in traffic due to the closure of European airspace due to the Icelandic volcanic eruption.

ICG said that on a like-for-like basis, underlying passenger and car traffic was in line with that recorded in 2010.

Container freight volumes fell by 2.7pc to 151,600 teu (20ft equivalent units -- the standard industry measure), due to an increase in freight to and from Ireland being offset by a reduction on North Sea routes.

Units handled at Dublin and Belfast increased 14.5pc year-on-year.

ICG also said that while the overall roll-on, roll-off segment was weaker than expected, Irish Ferries bucked the trend, carrying 70,900 units in the first four months, an 11.7pc rise on the corresponding period in 2010.

The company said that while it was too early to predict the summer tourism market, it welcomed last week's announced cuts in VAT for the hospitality sector. Shares in the company were flat at €16.65.

Irish Independent