Channel tunnel operator Eurotunnel reported a drop in third-quarter sales today amid fierce competition and price cuts to send its shares down as much as 12.5 per cent.
The debt-laden company, which runs the undersea rail link between France and Britain, said it had been forced to offer heavy discounts over the summer holiday period to fend off competition from budget airlines and cross-Channel ferries.
The price cuts limited drops in traffic but hit revenue. Revenue in the three months to the end of September slipped to €203.9 million from €210.1 million a year earlier. Car traffic declined 5 per cent in an overall cross-channel market down 1 per cent, while truck shuttles came 4 per cent lower in a total market up 8 per cent.
Eurotunnel's volatile stock, which has lost half of its value since a new board took over in April, was down 12.5 per cent at €0.28 in Paris by 9.51 a.m.
Rail freight through the tunnel rose to 472,163 tonnes in the third quarter from 442,222 tonnes in the same period a year earlier, representing a rise of 7 per cent.
But new chief executive Mr Jean-Louis Raymond said although third-quarter sales were in line with expectations, they were not satisfactory.
A new cross-channel operator, SpeedFerries, entered the market in May 2004 with aggressive summer prices, putting additional pressure on Eurotunnel.
Eurotunnel said it would present a three-year business plan to its banks at the end of October, but the company was unable to say whether it would make the plan public at that time.