Irish Continental Group is forecasting a strong performance for the rest of 1998 boosted by additional capacity on its passenger and freight ships.

The group yesterday reported a loss before tax of £1 million in the six months to the end of April.

Seasonal factors mean ICG normally reports a loss in its first half and the latest results are an improvement on the year ago period, when losses of £1.81 million were recorded.

Operating profits rose to £2.62 million, from £540,000 during the same period the previous year, after taking account of central costs.

Commenting on the results, chairman, Mr Tom Toner, said that "in the absence of material adverse events outside the group's control", it was confident of a satisfactory outcome for 1998.

Sales rose by 25 per cent to £60.3 million on the back of strong growth in its main markets and extra capacity. This contributed to the increased operating profits. However, this was partially offset by an increase in the group's interest charge from £2.3 million to £3.6 million, due to the expansion of its fleet.

The group has declared an interim dividend of £2.59 for shareholders, a 17 per cent increase on 1997.

It is proposing to pay this to shareholders on July 10th next, while a scrip dividend option will also be available.

Turnover in the ferries division was up 17 per cent to £34.2 million, while operating profits rose from £540,000 to £1.48 million.

Passenger numbers on its Irish Sea routes grew by 16 per cent to 23,000, while freight volumes increased by 32 per cent to 67,000, mainly reflecting the added capacity of the Isle of Inishmore for the full half-year period.

Its container and terminal division also showed a solid improvement, with turnover up by 30 per cent to £26.5 million. Operating profits rose from £70,000 to £1.85 million. Meanwhile, the company also announced that Irish Ferries was to build a new high speed passenger and car carrying "fast ferry" which would operate on the Dublin to Holyhead route next summer. The new high speed vessel will operate along with the company's existing cruise ferry, the Isle of Inishmore, which began operating on that route last year.

Irish Continental Group will be seeking shareholder approval to build the new ferry next month. The ship, which will be built in Australia by Astral Ships at an estimated cost of $40 million (£28.7 million). If approved the new vessel will bring Irish Ferries' investment in new ships and shore facilities to more than £230 million over the last four years.

The new ship will be primarily aimed at the tourism market, will operate year-round and will take less than two hours to complete its journey.