Eurotunnel Offers Positive View of Brexit as Sales Up After Voteby
Channel tunnel owner says decline in pound lightens debt load
Truck shuttle boosts traffic, though Eurostar numbers decline
Channel Tunnel owner Groupe Eurotunnel SE offered an upbeat assessment of its prospects following Britain’s vote to leave the European Union, reporting higher third-quarter sales and predicting continuing growth in 2017 as the U.K. economy remains robust.
Revenue rose 4 percent to 320.3 million euros ($352 million), Eurostar said in a statement Wednesday, with truck numbers on rail shuttles between Britain and France up 14 percent to a record 400,000. The car tally gained 2 percent to 880,000, with July the best month ever, beating the previous high set during the 1998 soccer World Cup.
A decline in the value of the pound versus the euro following the Brexit vote will help lower the cost of servicing debt, Eurotunnel said, adding that history suggests exchange-rate variations have little impact on demand. The company also takes comfort from Bank of England and International Monetary Fund forecasts suggesting the U.K. economy will still grow next year, it said.
“These encouraging signs, combined with new records broken this quarter, put into perspective the change in public opinion following the vote in favor of Brexit,” Chief Executive Officer Jacques Gounon said in the release. “The group has never been stronger.”
Eurotunnel’s positive comments come after the Eurostar International Ltd. express rail service that links London with Paris and Brussels said Tuesday it would cut 80 jobs and reduce train frequencies amid a “challenging” operating environment. Airlines exposed to U.K. markets have also revised their earnings outlooks, with Ryanair Holdings Plc saying Tuesday that net income will increase only about 7 percent in the year through March 31 rather than the 12 percent previously estimated as sterling’s slide hurts U.K. receipts.
Eurotunnel said that Eurostar passenger numbers fell 10 percent in the third quarter, while adding that new services to Lyon and Marseille are seeing “real success.” Demand for travel to France, especially Paris, has slumped following a spate of terrorist attacks.
Europorte, which operates freight trains in France and through the Channel Tunnel, saw sales decline 7 percent in the period following a slide in the transport of cereals amid a poor harvest and lower exports. The company is in discussions to sell its GB Railfreight arm in the U.K., which has seen coal volumes ebb as Britain increases carbon taxes.
Eurotunnel shares rose 1.6 percent and traded 0.1 percent higher at 8.62 euros as of 1:52 p.m. in Paris. They’ve declined 25 percent so far this year.