Little to cause fright at Dungeons firm
● Revenues rose despite its London attractions coming under pressure
Edinburgh Dungeon owner Merlin Entertainments has reported stronger revenues despite last year’s terror attacks impacting the group’s London sites.
Merlin, which has a vast leisure portfolio spanning the likes of Madame Tussauds, Alton Towers, Legoland and the London Eye, said revenue lifted 4.7 per cent on an organic basis in the 40 weeks to 6 October, or by 2.6 per cent on a reported basis.
Growth was driven by new business development, which includes the launch of two new brands – Peppa Pig World of Play and The Bear Grylls Adventure. Resort theme parks also benefited from the summer heatwave across much of Europe, with revenue up 9 per cent at the division.
But the hot spell added woes to the group’s “Midway” attractions division, which comprises indoor city centre attractions such as Sea Life, Madam Tussauds and The Dungeons chain. Revenue in the division dipped 0.7 per cent.
Merlin said its London sites continued to feel the impact of last year’s terror attacks in the
0 The British leisure giant’s vast portfolio includes the Edinburgh Dungeon
NICK VARNEY, CEO
city, but added that the market was beginning to recover.
Chief executive Nick Varney said that although London tourism was picking up again, “it will still be some time before we get back to the position of late 2016”.
In yesterday’s trading update, he noted: “The cost environment remains challenging, with tighter labour markets in many parts of the world adding to the pressures resulting from legislative changes such as the national living wage in the UK. Our
productivity agenda remains a key area of focus, and it is testament to our teams that, despite these cost pressures, we have continued to deliver excellent levels of guest satisfaction overall.
“The underlying fundamentals of our markets are strong and we remain excited by the global opportunities that Merlin enjoys.”
Legoland Parks posted organic revenue growth of 6.4 per cent, but suffered from the lack of a new Lego movie release. Like-for-like growth was flat. Varney said that the parks are likely to benefit from the release of The Lego Movie 2 early next year.
Nicholas Hyett, equity analyst at financial services group Hargreaves Lansdown, said: “Top-line revenues might be moving in the right direction, but under the surface Merlin is struggling to get customers through the gates.
“The smaller Midway attractions have been weak for some time, largely because of terrorist attacks on London dampening the tourist market in the group’s single largest destination.
“But the worrying thing in these numbers is that the previously strong Legoland business seems to be joining the slump. The Lego Movie 2… should provide a boost in 2019. But it’s far from ideal.
He added: “A rising cost base is making matters worse, particularly in the UK where business rates and the national living wage are both putting pressure on margins.
“It would be a mistake to lose sight of Merlin’s longterm strengths – namely an increasing demand for experiences over material goods and some excellent brands – but the group is undeniably going through a rough patch.”
Merlin flagged 2018 full-year results in line with market expectations.
“The underlying fundamentals of our markets are strong and we remain excited by the global opportunities that Merlin enjoys”