PARIS: Twenty years after opening for business, Channel Tunnel operator Eurotunnel finally sees a strong and profitable future, supported by record passenger traffic and a growing freight business.
The company, twice forced to refinance after construction cost overruns and over-optimistic traffic forecasts, said it benefited from a recovering British economy last year and saw solid trading in February. It also expects to pay corporation tax for the first time next year.
CEO Jacques Gounon, who took the helm in 2007, said shareholders could expect a further dividend rise this year and next, after a 25 percent hike to 15 cents a share for 2013 announced on Thursday.
“For the first time in Eurotunnel’s troubled history, we consider the group’s situation is very satisfactory and we are confident in the future,” Gounon said.
The tunnel linking France to Britain carries the Eurostar high-speed train from Paris and Brussels to London and shuttle trains conveying passenger cars, coaches and freight trucks.
The 50.5 km link, which took nearly six years to build and cost 9 billion pounds ($14.94 billion) as well as the lives of several workers, was inaugurated by Queen Elizabeth and French President Francois Mitterrand on May 6, 1994.
It was built without taxpayers’ money on the insistence of former British Prime Minister Margaret Thatcher, leaving shareholders — many of them private individuals who were encouraged to invest, and bondholder banks, to bear the brunt of its unfolding financial troubles.
The project’s costs were nearly double those initially estimated. Revenue projections proved overly optimistic, shuttles broke down and a fire in the tunnel wreaked havoc in November 1996.
Eurotunnel’s debt pile brought it to the verge of bankruptcy in 1996 and then again in 2006, and after a long legal battle, bondholder banks forgave billions of euros of debt.
In 2013, an all-time high of over 10 million passengers took the Eurostar, while Eurotunnel’s shuttle services carried 2.5 million passenger vehicles and 1.4 million trucks. Eurotunnel’s revenue rose 12 percent to 1.1 billion euros, driven by a 16 percent jump in revenue at its rail freight unit Europorte.
“It’s obvious we are seeing an economic recovery in Britain that is actually very strong,” Gounon said.
He noted a growing number of Britons — who represent two thirds of the Tunnel’s users — were driving their cars onto its shuttles to go to continental Europe, but said that in France, consumer confidence was still grim.
“The Brits are in need of a bit of fun” and eager to turn the page of austerity, he said. “But the French are feeling down in the dumps.”
Earnings before interest, tax, depreciation and amortization (EBITDA) reached 449 million euros and Eurotunnel is aiming for 460 million euros this year and over 500 million in 2015.
Earnings however, came below market forecasts of 482 million euros for this year and 521 million in 2015 in a Reuters poll. Analysts found the guidance disappointing, and Eurotunnel shares were down more than 3 percent having risen 34 percent in the last 12 months.
Gounon said the guidance factored in a continuation of the loss-making ferry service between Calais and Dover, MyFerryLink, a service whose future hangs in the balance pending the outcome of an inquiry by Britain’s Competition Commission. A preliminary finding on the case will be released at the end of next week, he said.
Gounon said Eurotunnel would create extra parking space at its terminals and buy three additional freight shuttles to absorb truck traffic, which he saw rising 3-4 percent annually.
Gounon also saw potential for 14.2 million Eurostar passengers by 2020 if new high-speed rail links were opened, for instance with Geneva in Switzerland.
Eurotunnel, whose concession runs until 2086, has already announced the Eurostar would connect London to Marseille in 2015 and London to Amsterdam in 2017. Germany’s rail operator Deutsche Bahn is set to start using the tunnel too from 2016.
Reuters reported earlier this month that the British government was considering selling its 40 percent stake in Eurostar.
Eurotunnel sees light at last after 2 dark decades
Eurotunnel sees light at last after 2 dark decades
AI will never replace human creativity, says SRMG CEO
- Speaking to Maya Hojeij, senior business anchor at Asharq with Bloomberg, Jomana R. Alrashid expressed pride in SRMG platforms that had absorbed and adopted AI
RIYADH: Jomana R. Alrashid, CEO of Saudi Research and Media Group, highlighted how AI cannot replace human creativity during a session at The Family Office’s “Investing Is a Sea” summit at Shura Island on Friday.
“You can never replace human creativity. Journalism at the end of the day, and content creation, is all about storytelling, and that’s a creative role that AI does not have the power to do just yet,” Alrashid told the investment summit.
“We will never eliminate that human role which comes in to actually tell that story, do the actual investigative reporting around it, make sure to be able to also tell you what’s news or what’s factual from what’s wrong ... what’s a misinformation from bias, and that’s the bigger role that the editorial player does in the newsroom.”
Speaking on the topic of AI, moderated by Maya Hojeij, senior business anchor at Asharq with Bloomberg, the CEO expressed her pride in SRMG platforms that had absorbed and adopted AI in a way that was “transformative.”
“We are now translating all of our content leveraging AI. We are also now being able to create documentaries leveraging AI. We now have AI-facilitated fact-checking, AI facilities clipping, transcribing. This is what we believe is the future.”
Alrashid was asked what the journalist of the future would look like. “He’s a journalist and an engineer. He’s someone who needs to understand data. And I think this is another topic that is extremely important, understanding the data that you’re working with,” she said.
“This is something that AI has facilitated as well. I must say that over the past 20 years in the region, especially when it comes to media companies, we did not understand the importance of data.”
The CEO highlighted that previously, media would rely on polling, surveys or viewership numbers, but now more detailed information about what viewers wanted was available.
During the fireside session, Alrashid was asked how the international community viewed the Middle Eastern media. Alrashid said that over the past decades it had played a critical role in informing wider audiences about issues that were extremely complex — politically, culturally and economically — and continued to play that role.
“Right now it has a bigger role to play, given the role again of social media, citizen journalists, content creators. But I also do believe that it has been facilitated by the power that AI has. Now immediately, you can ensure that that kind of content that is being created by credible, tier-A journalists, world-class journalists, can travel beyond its borders, can travel instantly to target different geographies, different people, different countries, in different languages, in different formats.”
She said that there was a big opportunity for Arab media not to be limited to simply Arab consumption, but to finally transcend borders and be available in different languages and to cater to their audiences.
The CEO expressed optimism about the future, emphasizing the importance of having a clear vision, a strong strategy, and full team alignment.
Traditional advertising models, once centered on television and print, were rapidly changing, with social media platforms now dominating advertising revenue.
“It’s drastically changing. Ultimately in the past, we used to compete with one another over viewership. But now we’re also competing with the likes of social media platforms; 80 percent of the advertising revenue in the Middle East goes to the social media platforms, but that means that there’s 80 percent interest opportunities.”
She said that the challenge was to create the right content on these platforms that engaged the target audiences and enabled commercial partnerships. “I don’t think this is a secret, but brands do not like to advertise with news channels. Ultimately, it’s always related with either conflict or war, which is a deterrent to advertisers.
“And that’s why we’ve entered new verticals such as sports. And that’s why we also double down on our lifestyle vertical. Ultimately, we have the largest market share when it comes to lifestyle ... And we’ve launched new platforms such as Billboard Arabia that gives us an entry into music.”
Alrashid said this was why the group was in a strong position to counter the decline in advertising revenues across different platforms, and by introducing new products.
“Another very important IP that we’ve created is events attached to the brands that have been operating in the region for 30-plus years. Any IP or any title right now that doesn’t have an event attached to it is missing out on a very big commercial opportunity that allows us to sit in a room, exchange ideas, talk to one another, get to know one another behind the screen.”
The CEO said that disruption was now constant and often self-driving, adding that the future of the industry was often in storytelling and the ability to innovate by creating persuasive content that connected directly with the audience.
“But the next disruption is going to continue to come from AI. And how quickly this tool and this very powerful technology evolves. And whether we are in a position to cope with it, adapt to it, and absorb it fully or not.”
