The Steam Packet’s operating profits fell sharply last year from £11.7m to £8m - with the company blaming rising costs and a below-inflation increase in fares.

It also carried the highest number of passengers since 2007, in a milestone year which saw the launch into service of the new flagship Manxman.

The directors’ report and financial statements for Steam Packet Group for the year ending December 31 will be laid before next month’s Tynwald sitting.

They show the operating profit of £8,017,210 was well down on 2022’s £11,730,248, largely due to a 12.5% increase in operating costs and a below-inflation increase in fares.

The Steam Packet said the introduction of Manxman in August, with its greater capacity and improved on-board facilities, contributed to total passenger numbers of 623,037, the highest since 2007 and 4.2% up on the previous year’s figure of 597,156.

This contributed to a 7.6% increase in passenger revenues, despite weaker motorcycle volumes during the TT and Manx Grand Prix.

Manxman was completed at a cost of £80.16m against a budget of £84m.

The board’s decision to secure a new build contract with the South Korean ship builder Hyundai Mipo Dockyard when the world was in Covid lockdown, proved extremely valuable, the Steam Packet said.

‘An equivalent build at today’s prices would be likely to exceed £120m. Furthermore the decision to hedge the USD shipyard instalments in November 2020 mitigated the foreign exchange risk and generated a cashflow saving of £8.3m,’ it added.

The accounts notes that Manxman’s hull and primary machinery had an 18 month warranty, which expired on November 11 this year, with 12 months on all other shipyard fittings. Separate extended warranties had been secured on non-shipyard contracts.

To date the Steam Packet Company has lodged 317 warranty claims against the builder, of which over 54% are resolved and closed.

Freight revenues during the year grew by 2.6% despite reduced consumer demand due to the general squeeze on household incomes.

Operating costs increased by 12.5% largely due to a £1.9m provision in relation to the Merchant Navy ratings pension fund funding deficit.

Other employment costs were 13% higher than the previous year, mainly due to having to duplicate crews on the Ben my Chree during Manxman’s introduction to service.

Other operating costs increased by around 6.4%, well below average UK and Isle of Man inflation rates.

During the year, the group settled debt obligations of £5.2m with the Treasury, which is the state-owned company’s sole shareholder.

Funds were also set aside for the future replacement of the fastcraft Manannan, with the group investing £16.4m in three-year fixed notes at 4.75% per annum.