Profits slide at Merlin Entertainments as the US dollar weakens

UK-based theme park operator Merlin Entertainments saw half-year profits slide by almost 14%.

Pre-tax profits for the six months to June 30 were down to £43 million from £50 million in the same period last year.

This came despite a rise in visitors to 30 million from 29.7 million in the same period in 2017 and a 4.5% increase in organic revenue to £694 million at the world’s second largest attraction operator.

Profitability was affected by adverse movements in foreign exchange, predominantly a weakening of the US dollar, according to the company.

However, the first half of the year represents a seasonally quiet period, with approximately 70% of annual earnings [EBITDA] typically generated in the balance of the year.

Chief executive Nick Varney said: “Organic revenue growth of 4.5% has been largely driven by our new business development with the early transition of Legoland Japan into a resort through the addition of a Sea Life Centre and a 252-room hotel together with the expansion of on-site accommodation at our Legoland resorts in California and Germany.

“In the existing estate we have been pleased with trading in the Resort Theme Parks operating group which saw organic revenue growth of 9.7%.

“We have had strong customer reception to our product investments and we continue to see the anticipated recovery at Alton Towers.

“The business has also undoubtedly benefited from the recent warm weather in northern Europe which due to the natural balance of our portfolio has conversely had an adverse impact on our indoor Midway attractions.

“Trading in Midway attractions more broadly has been satisfactory although it is too early to judge if there are definitive signs of a recovery in London.”

He described trading in Legoland Parks as being solid but year-on-year comparatives were challenging due to 2017’s strong Easter and two Lego movies.

Varney added: “Having so far traded in line with expectations we are now entering our peak season where we generate the majority of our annual profit.

“With many exciting new initiatives and launches to come in the future, we remain confident in our long term prospects.”

Attractions scheduled for the second half of the year include The Bear Grylls Adventure in Birmingham, Peppa Pig World of Play in Shanghai and Little BIG City in Beijing.

The company plans to open a Legoland in New York in 2020 and has study agreements in place for “a number of opportunities” in China.