Eurotunnel 'has turned corner'

Anglo-French Channel tunnel operator Eurotunnel said yesterday it had finally turned the corner with its first ever profit last year, having freed itself from the shackles of high debt costs.

"The year 2007 proves that the new Eurotunnel group has broken with its past," the company said in a statement.

The company, which completed a thorough restructuring of its debt, made a pro forma net profit of €1 million for the 12 months to December 31, last year, excluding a €3.32 billion exceptional profit thanks to its capital overhaul.

Eurotunnel remained mired in crisis talks with its creditors until last year. It had built up debts to unmanageable levels, exacerbated by lower-than-expected traffic and revenues.

Part of the problem was that when it dug the tunnel in the late 1980s and early 1990s, it could not foresee the ruthless competition it would face from low-cost airlines some years later while the lack of a high-speed rail link in Britain capped passenger streams.

"Now that we finally have the high-speed link in Britain, we are getting the passenger numbers we should have had 15 years ago," chairman and chief executive officer Jacques Gounon told reporters.

He said traffic in the first quarter had been very good but he declined to give much detail before April 15, when train operator Eurostar will publish its results. Eurotunnel said it had seen solid trading in the first three months of this year with sales up 15 per cent at constant exchange rates at €187.6 million.

"The exceptional level of activity in the first quarter of this year confirms our rapid progression," it said in a statement.

Earnings before interest, tax, depreciation and amortisation (EBITDA) reached €439 million, up 12 per cent year-on-year and €50 million more than expected by the market, it said.

Mr Gounon said the company could beat its 2010 EBITDA forecast of €500.5 million. "The first quarter gives me a lot of confidence that we can beat our forecast for 2010," he said.