Irish Continental Group (ICG), owner of Irish Ferries, has warned that it stands to lose close to half of this year's forecast profits if its services remain suspended until the end of the year.
ICG issued a profit warning yesterday, saying the interruption to its services caused by the industrial dispute at the company meant its results for the current year would be "substantially below market expectations".
The shipping group said the stoppage in its business had resulted in a loss of €5.5 million to date, due both to lost revenue and to additional costs incurred. If the group's ferry services remain suspended for the rest of 2005, the losses would amount to €11 million, ICG said.
Analysts had already estimated that the dispute was costing the company between €1.5 million and €2 million a week and the size of the losses announced in yesterday's trading statement came as little surprise to the market.
The shares lost 40 cent, or 3.8 per cent, to €10.10, but volume remained light. Just 43,000 shares traded as most investors stayed on the sidelines, awaiting greater clarity on the dispute.
However, analysts started officially downgrading their forecasts for both this year and next. Goodbody Stockbrokers has cut its 2005 pretax profit and earnings per share (EPS) forecasts by 30 per cent to €13.9 million and 56.3 cent respectively.
"We are also taking a prudent view of 2006 forecasts and lowering our pretax profit and EPS estimates by 17 per cent to €14.3 million and 57.3 cent," analyst Joe Gill said.
Merrion, which had been looking for pretax profits of €20 million and EPS of 85 cent this year, believes a continuation of the dispute to year-end could reduce earnings to around 45 cent.
Services at Irish Ferries, which operates three ferries between Ireland and Britain and one between Ireland and France, have been interrupted for the past 18 days. Industrial action began on two of the ferries on the British route on November 24th after the company pressed ahead with its controversial outsourcing plan.
The company sent security personnel onto two of its vessels without warning before later bringing in groups of agency staff for training.
Industrial action later began on a third vessel, while the service to France has been suspended since November 27th after the Rosslare Port Authority said the vessel would not be handled at Rosslare, its scheduled port in Ireland.
Intervention by the National Implementation Body and talks to resolve the situation at the Labour Relations Commission have since failed to reach a resolution to what is becoming an increasingly intractable dispute.
The row began when Irish Ferries last September offered its 543-strong Irish workforce a choice between redundancy or lower pay and less generous working conditions. The ferry group says that it needs to reduce its cost base if it is to face the challenges posed by competition from low-cost airlines and higher oil charges.
