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Chairman’s Statement on Current Trading
to the Annual General Meeting
Trading in the first quarter of 2005 has been challenging. In the
first 16 weeks of trading, a period which includes the annual overhaul
programme of the vessels, we have seen a weaker passenger market combined
with a firmer freight market.
In the passenger market our car volumes are down 4% year to date.
The tourist market into Ireland is facing perceptions of a high cost
destination combined with substantially increased low fare air capacity
from the UK, our principal market. In addition many new destinations
are being served from the UK by low fare air carriers.
In the freight market our volumes are up 4%.
Overall revenue within the Ferries Division is broadly unchanged while
savings in labour costs have been offset by increases in fuel prices.
Within the Container Division conditions remain competitive, although
the commissioning of our terminal extension in 2004 is leading to improved
profitability from terminal activities.
Fuel costs remain subject to the world price for oil which has recently
reached nominal highs. Based on current prices remaining unchanged
our fuel bill across the group would be Euro 6m higher than in 2004
which underlines the need for fuel surcharges.
The competitive environment remains challenging. New operators have
taken over two routes which had ceased operations at the end of 2004
(P&O’s freight route between Rosslare and Cherbourg, and
the Dublin - Liverpool passenger service previously operated by Isle
of Man SteamPacket). When combined with increasing air capacity into
the island it is clear that a consistent focus on cost reduction will
be necessary in order for us to prosper.
In this regard we have reduced the cost base on our service to France
to international norms. Having received clarification this week from
the Labour Court and the Union involved we have accepted the recent
Labour Court Recommendation on outsourcing. This recommendation also
calls for an independent review of our Irish Sea cost base. This review
will commence shortly.
John B McGuckian
Chairman
29 April 2005
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