BC Ferries Releases First Quarter Results

British Columbia Ferry Services Inc. (BC Ferries) released its first quarter results today. Net earnings for the three months ended June 30, 2016 (the first quarter of fiscal 2017) were $27.0 million, compared to net earnings of $18.8 million in the first quarter of the previous year.
These earnings reflect the effects of higher traffic levels, higher retail sales, higher ferry transportation fees, and lower financial costs, partially offset by lower social program fees, and higher operating costs.
In the first quarter of fiscal 2017, revenues increased by 4.9 per cent to $219.2 million, while operating expenses increased by 1.5 per cent to $178.6 million, compared to the first quarter of the previous fiscal year.
“It’s important for BC Ferries to maintain strong financial performance to help finance our 12-year $3 billion capital plan so we can continue to provide safe, efficient and reliable service for our customers for years to come,” said Mike Corrigan, BC Ferries’ President and CEO. “Part of that plan includes the three new Salish-Class vessels which are nearing completion and will enter service next year to replace the 51-year old Queen of Burnaby and the 52-year old Queen of Nanaimo. Other ships that will be replaced over the next several years include the North Island Princess, the Nimpkish and the Howe Sound Queen.”
Along with releasing BC Ferries’ first quarter results, Corrigan also announced that there will be upcoming pricing promotions in the fall of 2016 and the spring of 2017. Details about the promotions will be announced in the coming months.
Capital expenditures for the three months ended June 30, 2016 totalled $45.9 million, of which $30.8 million was invested in new vessels, and vessel upgrades and modifications. The remainder was spent on terminal marine structures, terminal and building upgrades and equipment, and information technology.
Across the system, passenger traffic increased by 2.5 per cent and vehicle traffic increased by 5.1 per cent, as compared to the first quarter of the previous fiscal year. During the three months ended June 30, 2016, BC Ferries provided over 42,000 sailings, carrying over 5.3 million passengers and over 2.1 million vehicles.

Significant events during the first quarter of fiscal 2017 include the following:
On April 1, 2016, BC Ferries implemented average tariff increases in accordance with the BC Ferries Commissioner’s Order 15-03 dated September 16, 2015. Tariff increases were 1.9 per cent on average. Also on April 1, 2016, due to lower fuel prices, coupled with the fact that the company has locked in pricing for a significant portion of its forecast fuel consumption to the end of fiscal 2017 through its hedging program, a fuel rebate increase of 1.9 per cent was implemented across the system. This fuel rebate increase completely offset the 1.9 per cent average tariff increase, effectively resulting in no net increase to customers at the beginning of Performance Term Four. Fuel rebates increased from 1.0 per cent to 2.9 per cent on the major and minor routes and a fuel rebate of 1.9 per cent was implemented on the northern routes.
On April 25, 2016, the Province confirmed the Government of Canada’s expansion of the criteria eligibility for projects to be funded under the New Building Canada Fund. This will provide an opportunity for BC Ferries to apply for funding for ferries and related infrastructure.
On May 17, 2016, BC Ferries finalized the sale of the 52-year old Tenaka to Lady Rose Marine Services of Port Alberni, B.C.
On June 2, 2016, the Salish Eagle and the Salish Raven, the second and third of the new Salish-Class vessels, were launched and christened at Remontowa Shipbuilding S.A. in Gdansk, Poland. The Salish Orca was previously launched and christened on November 24, 2015. The contracts with Remontowa Shipbuilding S.A, with a total value of $165 million, form the majority of the total project budget of $206 million. The original project budget of $252 million has been reduced by $46 million reflecting the elimination of tariffs to import the vessels into Canada. These vessels will be dual-fuel capable, designed to run primarily on natural gas with marine diesel as a backup.
BC Ferries’ full financial statements, including notes and Management’s Discussion and Analysis, are filed on SEDAR and will be available at www.sedar.com.
Under contract to the Province of British Columbia, BC Ferries is the service provider responsible for the delivery of safe, efficient and dependable ferry service along coastal British