Legoland owner squeezed after investing in its parks
MERLIN Entertainments’ chief financial officer has said the company will return to profit growth in the second half of the year after it was squeezed by rising costs in the first six months.
The company is targeting the rollout of Legoland theme parks as a key growth area. Its short-term fortunes, in part, hinge on their success.
However, the increased investment in Legoland also hurt Merlin’s bottom line by raising its depreciation charge, Anne-francoise Nesmes said.
Because the first half is Merlin’s low season, while its revenues are lower, its depreciation charge is the same throughout the whole year, she added.
The owner of Alton Towers, Madame Tussauds and Legoland theme parks saw profit before tax slip 13.7pc to £43m for the six months to June – on a 3.5pc rise in revenue to £709m.
“In the second half, you will see the profit growth,” Ms Nesmes told The Daily Telegraph.
Merlin, the world’s second-largest visitor attraction operator, has been hit hard in recent years as terrorism concerns weighed on the popularity of its parks. In 2015 the company was subject to waves of criticism after an accident at Alton Towers left 16 people injured.
Although the half-year results were better than expected, analysts remained concerned about rising capital expenditure and debt levels.
Nick Varney, the chief executive, admitted revenue growth was primarily a result of Legoland Japan and add-ons at similar parks. He said: “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 [like Madame Tussauds].”