Yahoo Finance Eurotunnel Profit Warning After Pound Slump
Cross-Channel rail operator Eurotunnel (Paris: FR0010533075 - news) has cut its annual earnings target by €25m (£21m) after the fall in the value of the pound following the Brexit vote.
The impact could be higher if the pound remains as low as its current level.
Eurotunnel, which operates the Le Shuttle (Taiwan: 2405.TW - news) service for cars and coaches and also carries the separate Eurostar passenger service, issued the warning as it published half-year results.
It also said that Eurostar traffic had fallen by 3% in the quarter from March to June against the background of terror attacks in Brussels as well as strikes in Belgium and France.
Shares (Berlin: DI6.BE - news) , which have already fallen sharply in the wake of the Brexit vote, were down 1.5% by the close of trading in Paris on the results.
Elsewhere, low-cost airline Wizz Air (LSE: WIZZ.L - news) , which flies mainly to central and eastern Europe, said that it was cutting its growth in the UK and re-deploying capacity to non-UK routes as a result of the slump in the pound.
Eurotunnel said that it did not expect to see a significant impact to its business from the Brexit vote in the short term.
Effects further out were harder to judge, but the company said the decision was not likely to affect long-term sustainable growth given the "strong and durable" commercial links between London and the continent.
It also note that it had operated over 22 years which had seen significant currency movements without hindering the general trend of traffic growth.
Eurotunnel said its full-year earnings target of €560m (£470m) for the 2016 financial year, based on an exchange rate of €1.375 to the pound, was now €535m based on an average rate of €1.273 for the first half of 2016.
But it said a bigger 10% fall in the exchange rate - to just under €1.24 - would knock around €35m off its earnings.
The pound is currently lower than this, trading at about €1.19 on Wednesday - having fallen sharply on the night of the referendum result.
Latest half-year results showed Eurotunnel's pre-tax profits rose 13% for the first half to €45m as revenues climbed 2% to €582m (£489m).
Chairman and 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."
