Channel tunnel group Getlink's warns Brexit to weigh on second-quarter business

Channel tunnel group Getlink's warns Brexit to weigh on second-quarter business
Jacques Gounon, Chairman and Chief Executive Officer of Channel tunnel operator Getlink, formerly known as Eurotunnel, poses before the company's 2017 annual results presentation in Paris, France, February 21, 2018. REUTERS/Stephane Mahe   -  Copyright  STEPHANE MAHE(Reuters)
By Reuters

By Dominique Vidalon

PARIS (Reuters) – Channel tunnel operator Getlink posted record 2018 profits on Thursday and warned of disruptions to its business during the second quarter of this year, regardless of whether Britain leaves the European Union with or without a divorce deal in March.

Getlink, formerly known as Eurotunnel, said that it expected 2019 earnings before interest, taxes, depreciation and amortisation (EBITDA) to decline to 560 million euros (487.05 million pounds) from 569 million in 2018 in the event of a “no deal” Brexit and to rise to 575 million if an agreement was reached.

“We are being very cautious though we are confident in the commitment of Britain and France to quickly set up effective border control procedures without any operational discontinuity,” Getlink CEO Jacques Gounon told a conference call.

“We nevertheless expect disruptions during the second quarter,” he added.

The stakes are high. In 2018 the group carried 21 million passengers, 17 million trucks, 2.7 million cars and 26 percent of trade between Britain and the European Union, supporting thousand of jobs. There are fears a hard Brexit would slow


Businesses have been warning of long tailbacks for lorries transporting goods between Britain and mainland Europe, and the British government has said most goods from the EU will be allowed into Britain without full customs checks for at least three months if there is no Brexit deal.

In January, Eurotunnel said it was taking steps to ensure that a no-deal Brexit would have minimum impact on its transport network. Getlink spent 13 million euros in Brexit preparations in 2018 and so far in 2019, Gounon said.

Earlier this month Getlink signed a deal to equip Eurotunnel terminals in France and Britain with automatic face recognition technology to speed up and secure border crossing.

Getlink is also increasing the size of its French terminal, allowing more trucks to park while they wait for customs inspections.

Longer-term, Getlink said it remained confident in the solidity of its businesses and kept its target for EBITDA to exceed 735 million in 2022 and to grow dividend by 0.05 euros per share annually by 2022.

Getlink carries Eurostar high-speed trains between Paris, Brussels and London, as well as shuttle trains containing passenger cars, coaches and freight trucks.

Its EBITDA 2018 rose by 9 percent to 569 million euros, beating expectations, as revenue rose 5 percent to 1.079 billion.

Getlink also increased its 2018 dividend by 20 percent to 0.36 euros per share, ahead of a previous target of 0.35 euros.

Italy’s Atlantia is Getlink’s top shareholder with a 15.49 percent stake, followed by hedge fund and activist investor The Children’s Investment Fund Management (TCI) with an 11.08 percent stake.

In December French construction and concessions group Eiffage bought 5 percent of the capital, which Gounon said showed its confidence in the company despite Brexit.

(Reporting by Dominique Vidalon; Editing by Leigh Thomas)

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