The Channel Tunnel operator has said a no-deal Brexit is “very likely” as it warned that annual profits will come in at the lower end of forecasts.
Getlink said it expected underlying earnings for the year of €560m (£503m) – its no-deal scenario – as opposed to the €575m it expected under an agreed exit deal. The company, formerly known as Eurotunnel, accounts for 26% of goods trade between the UK and continental Europe.
“As the absence of an agreement on Brexit on 31 October is becoming very likely, the reference scenario for 2019 is now the no-deal one,” Getlink said in its half-year results.
But Getlink’s lower-end estimates still rely on the UK and EU putting in “efficient” border controls that “do not result in disruptions”.
The group said uncertainties created by Brexit delays and the subsequent impact on the economy knocked its financial performance in the first half of the year. A sharp slowdown in Channel Tunnel crossings, as well a French customs officer strike, were particularly harmful to its Eurotunnel operations, whose revenues rose just 1% to €456m. Getlink’s main business is cross-Channel rail freight and passenger car and truck shuttles.
“After a first quarter of strong growth, which was boosted by the stockpiling by British companies during the first three months of the year on the assumption that Brexit would take place on 29 March, the cross-Channel truck market contracted sharply in the second quarter,” Getlink said.
The drop came as companies paused their stockpiling efforts and car manufacturers decided to schedule annual factory closures in April in anticipation of the Brexit deadline, instead of August.
Overall, group earnings before interest, tax, depreciation and amortisation fell by 2% to €255m, while revenue grew by just 2% to €523m.
Meanwhile, London Heathrow airport took a more optimistic view on Brexit, saying the chances of the UK leaving the bloc without a deal were low. While there are still unresolved travel issues, including around pet passports and cargo screening in the case of a no-deal Brexit, the London airport operator said the scenario was unlikely.
It came as Heathrow reported a 4% rise in revenue to £1.5bn, while adjusted Ebitda rose 7% to £907m.