P&O, the leading cross-Channel ferry provider, warned yesterday that full operation of the Channel Tunnel would hit earnings from ferries this year.
But Lord Sterling, chairman of the shipping to Bovis construction group, was putting a brave face on it. Referring to the build-up to a full service by the Channel Tunnel operator, Eurotunnel, later this year, he said: "Depending on how quickly they get their act together, they will obviously take some of our market share. But with the growth in the market, we could get it back quite quickly."
The shares fell 9p to 582p, but observers suggested this was mostly due to profit-taking after a strong run-up ahead of results yesterday.
The figures showed P&O's growing reliance on ferry operations, which is now the group's most profitable division, raising operating profits by 49 per cent to £114m last year. Total profits, ahead of asset disposals, jumped from £242m to £341m in the year to December, largely in line with expectations.
P&O said its market share on the key Dover to Calais route had fallen a few points in the early months of this year as services through the tunnel - started last autumn - have built up. But the company still commands well over 50 per cent of both the car and freight market on the route.
Analysts remain divided about the likely effects of the full operation of the tunnel. Richard Hannah, of the brokers UBS, said he expected it to have "a major impact" in the next year or two, but Ian Wild, of Barclays de Zoete Wedd, suggested that delays to services would allow the market to grow to fill the gap. "The market will have a hiccup at some time, but no more than that. Everyone will wonder what all the fuss was about in 18 months," he said.
Eurotunnel has recently shaken up its sales and marketing department in the wake of the chaos surrounding its "turn up and go" service earlier this month. Neil Cooper, the UK sales and marketing director, left about 10 days ago, following the departure of Christopher Garnett, the commercial director, earlier in the month.
Investment Column, page 34