Sterling slide pounds Eurotunnel earnings outlook

Eurotunnel, which manages the rail link under the Channel, lowered Wednesday its earnings targets due to the fall in the value of the pound but said that Brexit would not harm long-term growth.

Sales fell 10.3 percent to 581.8 million euros ($639.2 million), although three-quarters of this was due to the shutting down of its ferry service MyFerryLink, the company said.

The rest was attributable to the value of the pound, which had already slid before the vote by Britain to leave the European Union in June, after which it collapsed to a 31-year low against the dollar before recovering slightly.

But Eurotunnel said its analysts "have concluded that the potential impact of this decision is not likely to affect the long term sustainable growth of the Channel Tunnel?s activity..."

"During the 22 years that the Tunnel has been in operation, sterling has experienced significant fluctuations against the euro without hindering the general trend of traffic growth," it added.

It also said Brexit would be unlikely to have a major impact on travel formalities as Britain had never belonged to the passport-free travel zone in Europe, while "commercial relations between London and the Continent are strong and durable".

- 'Financial market uncertainty' -

Chief executive Jacques Gounon said that "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".

Operating profit as measured by earnings before interest, taxes, depreciation and amortisation (EBITDA) slid 1.3 percent to 248.7 million euro, although it would have grown 3.6 percent if exchange rates were held constant.

But the company lowered its 2016 EBITDA target from 560 million euros 535 million euros.

However that new target is based on the pound being worth 1.27 euros, while on Wednesday morning it traded around 1.19 euros.

Net profits in the first half of the year came in at 59.8 million euros, a jump of 53 percent, as the ferry operations no longer weighed on the bottom line.

Gounon told journalists "we aren't seeing any slowdown in reservations for this summer".

The company said the March terror attacks in Brussels that left 32 dead and strikes in Belgium and France had led to a decline in traffic on the Eurostar high-speed passenger service of just 3 percent.

Gounon pointed to increasing traffic of lorries on the Truck Shuttle service, but the migrant crisis appeared to still have a strong effect on rail freight, which fell 43 percent by volume.

Eurotunnel's shares were down 1 percent in morning trading while the main index on the Paris stock exchange was up 0.7 percent.