Eurotunnel's share price drops after profit warning

 
James Nickerson
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(FILES) An Eurostar train emerges from t...
Gounon pointed to financial market uncertainty caused by Brexit (Source: Getty)

Eurotunnel has warned over its earnings this year and next after the pound's rapid plunge in the wake of last month's Brexit vote.

The Channel Tunnel operator said its 2016 objective of €560m (£469m) in earnings before interest, taxation, depreciation and amortisation (Ebitda) was now €535m due to a change in the exchange rate.

Meanwhile, its 2017 objective of posting Ebitda of €605m has now been lowered to €579m.

Its share price fell by more than 1.4 per cent on the news.

It said based on the pound being seven per cent lower against the euro, its profits are now expected to be 4.5 per cent lower this year and 4.3 per cent down in 2017.

Read more: Eurotunnel smashes traffic record as it posts revenue growth

While Sterling has made some recovery, the warning comes as the currency has tumbled to hit 31-year lows against the US dollar and plummeted against the euro.

"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," chief executive Jacques Gounon said.

"As the mechanisms for and the means by which the UK will leave the European Union have yet to be determined, it is difficult to predict the effect on the macro economic and political environment and therefore on cross-Channel transport and the Group’s activities," the company added.

The news was announced today as part of the company's half-year results. It said that there was a three per cent year-on-year drop in traffic on high-speed Eurostar trains to 4.97m passengers, with people still concerned after the terrorist attacks in Paris and Brussels.

Read more: Eurotunnel posts three per cent rise in revenues in spite of Calais migrant chaos

Demand was also hit by rail strikes in Belgium and France.

However, the company delivered its 13th consecutive half-year of revenue growth despite that. It posted €582m for the six month period, a two per cent climb year-on-year.

After a net tax charge of €7m, the Group’s consolidated result from continuing operations was a profit of €38m compared to a net profit of €36 million restated for the first half of 2015.

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