Merlin Entertainment's share price loses its magic despite revenues rising

 
Francesca Washtell
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Props From The London Dungeon Are Sold Off After The Popular Tourist Attraction Moves Home
Merlin runs the London Dungeon, which is now located on the South Bank (Source: Getty)

Merlin Entertainment's share price dipped today despite the world's second largest tourist attraction operator posting a rise in revenue.

The figures

Revenue at the Thorpe Park and Alton Towers operator grew 5.3 per cent to £573m in the 26 weeks ended 25 June, up from £544m in the same period of 2015.

Visitor growth rose by 1.1 per cent to 28m, up from 27.7m last year.

Legoland Parks outshone Merlin's other attractions, with revenue up 11.1 per cent, while Midway Attractions, which runs attractions such as the London Dungeon, delivered revenue growth of 7.1 per cent.

Read more: Merlin admits health and safety breaches over Alton Towers crash

Revenues at Merlin's Resort Theme Parks Operating Group fell seven per cent year-on-year, as the company has "continued to experience lower visitation at Alton Towers following the accident in June 2015".

Profit before tax edged up marginally by 0.9 per cent to £50m, but operating profit dipped 2.2 per cent to £70m, down from £71m in the same period of last year.

Adjusted earnings per share grew by 3.2 per cent to 3.6p per share.

Merlin's stock was trading 1.9 per cent lower at the time of writing to 465p, but it had previously fallen to a day low of 455.9p and was among the FTSE 100s biggest fallers.

28 July 2016 @ 12:45pmMerlin Entertainments (MERL)

Why it's interesting

Merlin said today it has made "good progress" towards its 2020 strategic milestones by opening three new Midway attractions and 210 new rooms at four of its theme parks across the period, while Legoland Dubai remains on track to open in October.

The company will also open Legoland attractions in Japan in April 2017 and is planning attractions in Korea, North America and China.

Read more: Merlin Entertainments poaches finance chief from Dechra Pharmaceuticals

However, it has also said the London and Alton Towers markets remain "challenging". Merlin said that although it is seeing some recovery in mainstream leisure visitation, it is still experiencing "significantly lower overall volumes".

The group also said that because more than 70 per cent of its profits are generated outside the UK, its 2016 results should benefit from a positive translational impact if Sterling's weakness since the June 23 Brexit vote versus the dollar and euro continues.

What Merlin said

Chief executive Nick Varney said:

Merlin has delivered a resilient performance in the first half that reflects the benefit of our diversified portfolio and strong New Business Development programme.

As previously reported, many of the trends we experienced last year continued into 2016... However, 2016 has also brought some new challenges. Heightened security concerns, following attacks across Europe, have had an effect on city centre tourism, creating a challenging market and compounding an already difficult market in London.

Against this backdrop, the Midway Attractions Operating Group‟s performance represents a relatively robust result.

Despite this difficult current trading environment, we remain confident about the medium and long term prospects for Merlin in both our existing estate and around our 2020 milestones.

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