Eurotunnel issues earnings warning after Brexit vote


Eurotunnel has warned over earnings this year and next after the pound's plunge since the Brexit vote.

The Channel Tunnel operator - which carries train services between London, Paris and Brussels - cut its outlook for underlying earnings by 25 million euros (£21 million) in 2016 and 26 million euros (£22 million) next year after the pound's drop in value against the euro.

Sterling plunged to 31-year lows against the US dollar and tumbled against the euro after the UK's vote to leave the EU, although it has since regained some ground.

Eurotunnel said that based on the pound being 7% lower against the euro, its profits are now expected to be 4.5% down in 2016 at 535 million euros (£449 million), and 4.3% down in 2017 at 579 million euros (£486 million).

It said the impact of Brexit on cross-channel traffic was uncertain, but it did not expect any significant knock to its activities in the short term, with trading so far remaining "buoyant".

Chief executive Jacques Gounon said: "Despite the financial market uncertainty generated by the United Kingdom voting to leave the European Union, the group remains confident in the performance of its economic model and in its outlook."

Eurotunnel saw as much as a third wiped off its stock market value in the immediate aftermath of the Brexit decision, despite moving to reassure that trading would not be impacted by the vote.

Eurotunnel's half-year results showed a 3% year-on-year drop in traffic on high-speed Eurostar trains to 4.97 million as travellers remained cautious after the terrorist attacks in Paris last November and following the Brussels attacks in March - while demand was also impacted by rail strikes in Belgium and France.

Cross-channel rail freight slumped by 43% in the first six months of the year after it was hit by the migrant crisis in Calais.

It spent an extra 3 million euro (£2.5 million) on increased security to help secure the migrant site and the new passport controls for people leaving the UK introduced by the Government from April 2015.

But Eurotunnel said truck shuttle traffic was up 10% in the first half, with almost 830,000 trucks transported.

Overall underlying earnings rose 4% to 249 million euro (£208 million) in the first half.

Shares in the Paris-listed group fell 1% after the profit warning and remain 17% lower than they were before the Brexit vote.