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Channel tunnel operator Eurotunnel keeps profit goals despite Brexit
[PARIS] Channel tunnel operator Eurotunnel said on Tuesday that the outlook for the British economy remained positive despite Brexit, as it kept its forecasts for more profit and dividend growth for this year and next.
Eurotunnel carries Eurostar high-speed trains between Paris, Brussels and London, as well as shuttle trains containing passenger cars, coaches and freight trucks.
"We are very calm about our guidance. We continue to do well and to improve our EBITDA and our revenue. At this stage we are very positive and we confirm our 2017 and 2018 goals for profitability and dividends," Chief Executive Jacques Gounon told a conference call on first-half results.
Eurotunnel lost as much as a third of its market value in the immediate aftermath of Britain's vote in favour of Brexit and leaving the European Union back in June 2016, despite offering reassurances that it would not suffer.
Eurotunnel, however, said in a statement that it did not see any significant impact from Brexit on its business in the first-half, although it continued to keep a close eye on the matter.
The International Monetary Fund predicted on Monday that Britain's economy now looked set to grow by 1.7 per cent this year, down from a forecast made in April of 2.0 per cent. The IMF said its downgrade reflected Britain's weaker-than-expected growth in the early part of this year.
"We are expecting some growth in Britain, albeit not an exceptional growth. Our traffic is holding up and the summer is looking good," Mr Gounon said.
Eurotunnel kept its forecast for earnings before interest, taxes, depreciation and amortisation (EBITDA) of 530 million euros (S$840.8 million) this year and 560 million in 2018. This would compare with EBITDA 2016 of 514 million.
It was also still targeting a dividend of 0.30 euros per share for 2017 and 0.35 euros for 2018.
The 2017 and 2018 forecasts were made on the basis of an exchange rate of 1.175 euros per pound.
The company reported an 8 per cent increase in EBITDA for the first half of 2017 to 242 million euros, while first half revenues rose 3 per cent.
This was achieved thanks to lower operating costs and a 3.7 per cent rise in average prices on the Channel tunnel fixed link, which offset lower truck and car shuttle traffic.
Eurotunnel said truck shuttle traffic was down 0.8 per cent in the first half of 2017, with 823,147 trucks transported.
Truck traffic at the start of 2017 suffered from a decrease in fruit and vegetable traffic to Britain due to bad weather in southern Europe, and Gounon said the goal of transporting two million trucks by 2020 could be delayed by one year.
Passenger car shuttle traffic fell 2.1 per cent during the first half, partly impacted by elections in France and Britain.
However, the number of Eurostar passengers travelling through the Tunnel rose by 1 per cent despite militant Islamist attacks in Britain during the first-half of this year.