EuroBusiness Media (EBM): Groupe Eurotunnel SE reports for the first half of 2017, and to comment these results I have the pleasure of being with Jacques Gounon, welcome. You are the Chairman & CEO of Eurotunnel. Could you give us your key takeaways and comments on these 2017 first-half results?
Jacques Gounon: We had a very good and positive half-year. We have to keep in mind that 2016 has been an outstanding year for the Group, and in fact this half year we do more: a revenue growth of +3%, EBITDA growth +8% and all the signals we have in our business are positive. So we are very confident and very pleased with the results. And I would like to add that we launched last June a refinancing which has a significant positive signal for the Group because it means - due to the fact that we had a very successful refinancing - that markets are fully confident in the future of the business, so it’s quite good for us as managers. And more than that, of course, we raised more debt in order to have the capability to finance the ElecLink business - the interconnector project between the UK and Europe - and we do that with an overall average cost of debt of less than 4%. And if we consider the Weighted Average Cost (WAC) which is absolutely key for analysts, it decreased by 200 basis points. So having said that, really we can say that this half-year 2017 is definitely in line with our hopes and the results are quite good.
EBM: You mentioned that markets showed their confidence in your business model by oversubscribing by 2.5 times your refinancing project. Could you walk us through performance of your different businesses.
Jacques Gounon: If we consider Fixed Link which is our main core business, we have been able at the same time to maintain historical market shares against competition - and the competition is tough: 58% for passengers, for cars; 39% for trucks. So whatever the evolution of the market, definitely we are the leader and we are keeping the best position on that market. At the same time, and this is absolutely key, we have been able as for the ten past years, to increase our yield. This semester, our yield has increased by 3.7%, which is roughly three times the level of the present average inflation between the UK and continental Europe. So it means that, as we are delivering quality of service, focusing on speed - and speed is highly valued by our clients - it’s quite clear that we are creating a significant added-value for our shareholders, summarised in our motto: speed, speed, speed!
EBM: Could you tell us now about your other two businesses, Europorte, your rail freight service on one hand, and ElecLink on the other?
Jacques Gounon: We have the same spirit in order to manage Europorte and ElecLink, which is a specific case. For Europorte, the first issue of course is to have the best customers, and we won a lot of positive significant contracts or renewed positive contracts; and of course we monitors costs, which is absolutely key in our business. And if we consider both the concession itself - the Fixed Link under the Channel - and Europorte, the key management responsibility has been to manage costs in order to be sure we have the right cost basis in order to be profitable. We have seen the results for the concession (Fixed Link) are quite positive; the result for Europorte, in a rail freight business that is a very difficult business, is that we have been able to reach a positive EBITDA which increased by €4 million. Keep in mind Europorte is a very small company. So we have a positive EBITDA. We believe we are the only ones in France to have such results; it means that the rail freight business has a real value and it means that our management is the right one. And I would like to pay tribute to our teams, in the Fixed Link, in Europorte and ElecLink for what they are delivering.
Just a word on ElecLink, the interconnection which will go through the tunnel itself, we started the erection of the conversion stations - because it will be direct current and not alternative current, for safety reasons which are key - we are on time and on budget. And we have the best partners - Siemens, Balfour Beatty, Prysmian -, i.e. the world leaders in this category of business, it’s the way we work, we believe that to work as a leader with the world’s best-in-class is the right way to manage this kind of business.
EBM: Let’s turn to the future now. The Brexit has been initiated but there is a lot of uncertainty remaining. What is your outlook for the second half of 2017 and beyond?
Jacques Gounon: If we consider the traffic we are quite pleased. You know that Eurostar is doing a very good job, we have a very strong booking for this summer, so really no doubt about the fact that everything will go in a very positive way. Having said that we know that there are a lot of question marks regarding Brexit. Obviously we are carefully looking at that. What we can say is that it will take time; it’s mainly an issue for politicians both in the UK and on the continent. But for our business, for our customers - and we are working closely with them-, what we are doing is to prepare, whatever the environment will be in the five years to come, the next way to manage this kind of issue. And frankly speaking, as our quality is to offer a very fluid and speedy journey under the Channel, we believe we need to work on frictionless border - which is absolutely key -, meaning there is a need for digitalisation, and we have a very strong program in order to deliver the best tools to our customers. So let’s say, yes Brexit will change a lot of rules, but we believe it is an opportunity and it gives us the possibility to change our business model into something that will be more fruitful. And so the consequence of that is clearly to explain that we have no doubt about our objectives, both for 2017 and 2018, both on EBITDA and dividend. And we look for the 35 cents dividend in 2018 paid in 2019.
EBM: Jacques Gounon, Chairman & CEO of Eurotunnel, thank you very much.
Jacques Gounon: Thank you.
