BELL Line, which has been affected by intense competition mom the Channel Tunnel is facing a financial restructuring. According to shipping and transport group, Irish Continental (ICG), which has a 25 per cent stake in the company, this will involve creditors and shareholders.
Mr Eamonn Rothwell, ICG managing director, said he is confident that Bell can be turned into a viable business. Industry sources say Bell needs an injection from the shareholders but this will form part of a restructuring. Bell employs around 600 people in Ireland, Britain and continental Europe. No moves towards a restructuring have yet been made. However, industry sources say talks between the interested parties will begin shortly.
Bell was responsible for ICG's drop in pre tax profit from £11.0 million to £10.5 million in the year ended October 31st 1996 announced yesterday. ICG has taken a double blow from its 25 per cent shareholding in Bell. First, it has had to contend with a write off of its carrying interest. That amounted to £1.6 million.
Second, its share of Bell's losses amounted to £1.59 million. Without these ICG recorded an acceptable 33 per cent growth in profit at the operating level. The value of ICG's stake in Bell has now been reduced to nil.
Shareholders were alerted to the problems at Bell at the interim stage but they have turned out worse than expected. Bell had to contend with a downturn in the trading environment on its North Sea routes where the added capacity and pricing policy of the Channel Tunnel affected both rates and volumes.
In addition, Bell had to contend with the examinership of a company from which it chartered a number of its vessels, and in the second half was adversely affected by "severe storm damage" to its Waterford terminal, according to ICG.
ICG said it is attempting to restore profitable trading at the associate. With this objective in mind, discussions are taking place on the financial restructuring of the business.
Despite the problems at Bell, ICG is raising the final dividend from 3.0p to 3.6p, making a total of 5.4p compared with 4.5p previously. Earnings per share before exceptional items grew modestly, from 42.7p to 44.2p. Earnings were helped by a tax credit compared with a charge in the previous year. The group's gearing, however, rose from 67 per cent to 86 per cent.
Chairman, Mr Tom Toner notes that if the payments on the vessel under construction in Rotterdam and the development of the new Lo Lo terminal in Dublin are excluded, gearing would go down to 43 per cent.
ICG sales rose from £116.4 million to £127.2 million. Growth arose in both areas of operation sales in ferries grew from £84.5 million to £91.4 million while sales in the container and terminal side increased from £34.9 million to £39.7 million.
Profit before interest in the ferries division grew from £11.9 million to £16.1 million. Passengers on the Ireland Britain route rose by 5.4 per cent to 1.18 million while passenger cars grew by 3.5 cent to 216,000, reflecting an increase in the market share, Mr Toner said.
However, business on the Ireland France routes went into reverse with a decline of 10.7 per cent in passenger numbers to 220,000. The chairman blames continuing weak consumer confidence in continental Europe, additional sun holiday capacity in Ireland and increased competition from airlines. These led to the suspension of sailing during the winter.
The additional deck capacity of the my Isle of Innisfree led to a 40 per cent increase to 87,400 in freight units carried. This said Mr Toner, was in line with expectations.
Profit before interest in container and terminal division, increased from £2.60 million to £2.62 million. Freight volumes grew by an effective 15 per cent.
However, rates remain competitive. Dublin Ferryport Terminal enjoyed a 35 per cent increase in units to 63,800 due to a full year of its Dublin/Liverpool service.
The shares rose 2p to 417p in an after hour deal (12 months high 575p low 410p) are on an undemanding prospective of pie 8.3, assuming earnings per share rise from 44.2p to 50p this year.
