HIPPING group, Irish Continental, has produced an impressive set of half year results, with their seasonal loss in the first half down from £3.17 million to £1.94 million.
But the results would have been substantially better were it not for a severe setback at the container shipping group Bell Lines, where ICG has a 25 per cent stake. Bell had losses of £2.6 million in the first half of the year compared to a £1.3 million profit in the first half of 1995, and ICG's share of those losses was £663,000.
Industry sources believe that Bell's losses for the full year would be in the order of £4 million, compared to profits of £3 million last year and £4 million in 1994. This would mean that ICG's share of Bell's losses for the full year would be in the order of £1 million.
Bell's container business in the North Sea has been severely affected by the Channel Tunnel which has had the effect of driving container rates and volumes downwards. The group is currently implementing a cost reduction programme with the aim of improving the performance.
The severe 1996 setback at Bell provides mixed blessings for ICG. While ICG has to take 25 per cent of the losses into its profit and loss account, the losses may have the effect of driving the market value of Bell sharply lower, and thus lowering the cost of buying out the other shareholders.
ICG has an option to buy out the other shareholders - Natwest Ventures (30 per cent), Citicorp Venture Capital (30 per cent) and Bell management (15 per cent) - next year. ICG chief executive, Mr Eamon Rothwell, said if ICG decided to exercise its option to take full control of Bell, the price paid would be based on an independent market valuation.
If Bell was still losing money heavily, the price tag on the company would likely be substantially lower than if ICG bought full control this year. "There's a price we'll pay for Bell," Mr Rothwell added.
Other than Bell, ICG put an impressive performance in what is traditionally a loss making six months. The group, however, continues to suffer from weakness in its passenger operations to the Continent which has continued through the peak summer season.
The weakness of the German and French economies has reduced passenger volumes into Ireland while non holiday consumer spending and the good summer in 1995 has meant that fewer passengers travelled from Ireland to the Continent, said Mr Rothwell.
Overall passenger revenue grew 10 per cent to £1.34 million while passenger numbers were up 15 per cent to 431,000, passenger cars were up 6 per cent to 73,000 while ro-ro volumes were up 68 per cent to 47,000 units. ICG benefitted from the introduction of the Isle of Innisfree on the Irish Sea routes, and Mr Rothwell said that the group has increased its share of the market in the Irish Sea corridor despite the introduction of the HSS high speed ferry by Stena Sealink.
Container traffic grew 28 per cent to 66,000 units despite competitive freight rates. The main increases in container traffic were on the Ireland/Continent and Ireland/UK services and overall, freight revenue grew 28 per cent to £30.6 million.
Overall, ICG had an operating profit of £811,000 on turnover of almost £47 million in the first half, but interest charges of £2 million and the share of Bell Lines losses brought the pre tax loss to £1.87 million. Losses per share fell from 12.6p to 7.4p while shareholders are to benefit from a 20 per cent increase in the interim dividend from 1.5p to 1.8p per share.
The shares, which had risen ahead of the results, closed down 20p on 490p.
