by business editor Trevor Sturgess

Sinking profits at ferry operator DFDS have been blamed on the cost of setting up its Dover-Calais operation, coupled with recession and overcapacity.

The Danish company which runs cross-Channel ferries between Dover, Calais and Dunkirk, and other shipping services across Europe, reported pre-tax profits of £33m in 2012, a fall of 58% over the previous year ((2011: £78m).

“We’re not satisfied with this year’s result, which was affected by the recession in several of our key European markets,” said chief executive officer Niels Smedegaard.

“The start-up of a new route in the Channel and a new competitor in the freight market between Sweden and the UK also reduced earnings. A ray of light is the Baltic region and Russia, where there is still growth.”

But strong cash flow showed that DFDS was a robust business “even in a headwind.”

Mr Smedegaard added: “From a strategic perspective, we are in a strong position and we aim to grow further through acquisitions during 2013 to strengthen and expand our European network.

"At the same time, we are maintaining focus on streamlining and improving our operation through projects which encompass the entire business.”

He expected little or no volume growth in 2013, with performance continuing to be "weighed down by overcapacity in a number of markets.”

Turnover is expected to edge up by 5% due to the full-year effect of the expansion of the network, including the Dover-Calais service.