Eurotunnel posts £75m loss as sales of duty-free tumble

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The Independent Online

Eurotunnel, the Channel Tunnel operator, yesterday said it recorded first-half losses of £75m including debt charges, and said retail revenues had shrunk by two-thirds after the abolition of duty-free sales last July. The operator, which is saddled with more than £6bn of debt, said it was on course for financial recovery by 2002.

Eurotunnel, the Channel Tunnel operator, yesterday said it recorded first-half losses of £75m including debt charges, and said retail revenues had shrunk by two-thirds after the abolition of duty-free sales last July. The operator, which is saddled with more than £6bn of debt, said it was on course for financial recovery by 2002.

A spokeswoman for Eurotunnel, Sarah Kendall, said: "This half has seen a significant drop, which we always expected, but there has been an improvement in our underlying loss." Eurotunnel shares dropped 3.5p to close at 62.75p.

Richard Hannah, an analyst at Deutsche Bank, had predicted an operating loss, including debt charges, of £60m. He said: "It's worse than we expected but nothing sensational."

The company's first-half operating profits, excluding debt interest charges, rose 11 per cent and it reported a first-quarter growth of 42 per cent in its freight business. Patrick Ponsolle, Eurotunnel chairman, said: "This first-half result is in line with the objective announced at the beginning of the year to cover all of our interest charges and capital expenditure by our operational cash flow by the year 2002."

As expected, the abolition of duty-free sales knocked overall turnover, which fell by 9 per cent to £288m. Retail sales dropped from £93m to £26m. Eurotunnel has focused on increasing freight traffic, with shuttle sales climbing to £147m and the number of trucks carried in the tunnel rising by 10 per cent this year.

The operator still has a way to go before firm ground, however. French authorities have launched an inquiry concerning abuse of company money and insider trading into six officials of the company, including Mr Ponsolle, which has yet to report. And BAA, the airport operator which signed a 15-year contract to run retail operations for Eurotunnel, said it wanted to terminate its agreement.

Eurotunnel does not expect to pay a dividend until 2006.

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