EuroBusiness Media (EBM): Eurotunnel, the company that operates the Channel tunnel, reports earnings for 2008. Jacques Gounon, welcome. You are the CEO of Eurotunnel. What are your comments on the Group's performance in 2008?
Jacques Gounon (JG): Two great news. First, of course, a net profit of €40 million, which is something unknown in the past for Eurotunnel, and this will give us the possibility to propose a dividend to the shareholders, so this is really important for our community. If we look at the overall year 2008, first, of course, we had turnover which has been completed by the insurance premiums - € 44 million - all in all it’s plus 4% against last year. More importantly, the EBIDTA which is at €421 million, is plus 5% against 2007 which is absolutely key because I committed to the safeguard plan. We are 16% ahead of the safeguard plan. So, all in all, 2008 is bringing what we could expect of this year.
EBM: 2009, however, seems to be a year of economic slowdown and people are wondering if it won't be more difficult for you to pay your debt service charges in this environment?
JG: There is no problem at this stage, which is absolutely key also for the future of the company. Because the debt has been restructured at the right level compared to the cash flow generation of this company. And I would like to give only two figures. The debt service in 2008 is €249 million and the cash in hand at the end of 2008 is €276 million, which means that we have more cash than strictly needed in order to pay the debt service in 2009. And at the same time, last year, we bought back some shares and some notes. So just to confirm that we have no cash issue in this company.
EBM: One issue, however, is that you did lose some clients as a result of the fire in the tunnel. Are you confident that you will be able to recover all of the clients that were lost?
JG: It's clear that the fire took place at the worst moment because at the end of the year all the haulers are renewing their contracts and it's clear that our competitors had a significant competitive advantage against us in order to attract them. So now we have to make the reverse move. In ‘96, after the fire, it took between 12 and 18 months to have the full traffic back. We will try to do better. We know that throughout the civil works in order to repair the tunnel, the company has been fully motivated to bring back the service very early, which has been done. Having said that, it’s clear that we need to convince our customers that crossing the Channel with a journey time of only 35 minutes is a competitive advantage for them in this difficult economic environment. So, we do believe that we can convince our customers to come back.
EBM: To be specific now, is your opportunity cost resulting from the fire in the tunnel sufficiently well covered by your insurance policy?
JG: Definitely yes. The civil works, which will be below €60 million, will be repaid without problems. If we consider the loss in revenues, the coverage of the insurance is over a two-year period, because this is a consequence of the experience of the '96 fire, and even if we are doing our best efforts to have these customers back, the lack of revenue will be compensated by the insurance. And, as we are the most environmentally friendly way to cross the Channel, I do believe that because there is now a strong perception of the interest of the “green effect”, I do believe that we’ll have such customers back more quickly than it has been done in the past.
EBM: Jacques Gounon, CEO of Eurotunnel, thank you very much indeed.
JG: Thank you.
