July 23, 2019 / 6:39 AM / 3 months ago

Channel Tunnel group Getlink says 'no-deal' Brexit is becoming very likely

PARIS (Reuters) - Channel Tunnel operator Getlink (GETP.PA) posted lower first-half operating profits on Tuesday and said the scenario of Britain leaving the European Union without a divorce deal on October 31 was becoming “very likely”.

FILE PHOTO: The logo of Channel tunnel operator Getlink, formerly known as Eurotunnel, is seen during the company's 2018 annual results presentation in Paris, France, February 21, 2019. REUTERS/Charles Platiau

Getlink, formerly known as Eurotunnel, said its key reference scenario was now the “no-deal” one, and it therefore expected 2019 earnings before interest, taxes, depreciation and amortisation (EBITDA) to fall to 560 million euros (£503 million) from 569 million in 2018.

“Clearly our scenario is the no-deal but we can cope. We remain confident we can manage the next stages of Brexit and confirm the dividend growth policy,” Getlink CEO Jacques Gounon told a conference call.

“We are cautious but not worried. Economic activity will continue to develop”, he said, adding that Getlink’s businesses met “vital needs”.

STICKING TO ITS 2022 FINANCIAL TARGETS

The stakes are high.

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

Its first-half EBITDA declined by 2% to 255 million euros due to a slowdown in cross-Channel markets during the second quarter of 2019, and the negative impact of a French customs officers strike between March 4 and May 15.

Revenues, however, grew 2% to 523 million euros.

Over the longer term, Getlink remained confident in the resilience of its businesses and it kept its target for EBITDA to exceed 735 million in 2022 and to grow its 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.

In the cross-Channel car markets, the hesitancy of certain customers in relation to the effects of Brexit was slightly affecting the profile of reservations but Getlink remained confident in its traffic targets for the peak summer period.

Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta

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