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Alton Towers owner could drop out of FTSE 100 Index in top flight reshuffle

Published 29/05/2016

Merlin Entertainments faces tumbling out of the FTSE 100 Index on Wednesday
Merlin Entertainments faces tumbling out of the FTSE 100 Index on Wednesday

Alton Towers owner Merlin Entertainments faces tumbling out of the FTSE 100 Index on Wednesday when the stock market's committee announces the results of its latest quarterly review.

The theme park giant has suffered from a weak euro and lower numbers at Alton Towers after a crash on its Smiler rollercoaster left five people seriously injured last summer.

Helal Miah, investment research analyst at The Share Centre, said: "Merlin's place in the top 100 could be at risk after a troubled year.

"The serious accident at Alton Towers last June continues to impact the group's profitability, while it has also had to contend with a weak euro and a tough London market."

The group, which runs 110 attractions in 23 countries, said in February its theme park business slumped by 12.4% to £285 million in the year to December 26.

Overall, profit growth at the group was also held back by the accident, with pre-tax profits edging 0.3% higher to £250 million over the year.

The group also runs Madame Tussauds waxworks, the London Dungeon and the Sea Life centre.

Inmarsat is also under pressure after investors piled out of the stock following the satellite communications firm lowering its full-year guidance by 50 million US dollars (£34 million) to between 1.175 billion dollars (£802 million) and 1.250 billion dollars (£853 million) earlier this month.

Mr Miah said Inmarsat has been impacted by "a tough environment where governments are constrained in spending on communications equipment".

Manchester's Arndale shopping centre owner Intu Properties is also expected to fall out of the top flight, reflecting the pressure retailers have come under over the last year. Intu Properties owns 18 shopping malls across the UK.

A number of firms are jockeying for position to replace these companies to join the UK's biggest public businesses.

Property website Rightmove could force its way into the top flight after 15 years of consecutive growth that has seen it expand despite competition from rivals Zoopla and Onthemarket.com.

New and used car sales website Auto Trader could also join the blue chip index.

The firm, which attracts around 43 million visits to its websites a month, said in February it expects full-year underlying earnings to edge ahead of City expectations, to between £169 million and £171 million.

The group posted underlying operating profits of £144.1 million in the year to March 29 2015.

London-listed South African financial services firm Investec and Yorkshire-based chemicals maker Croda are also in the running to join the top flight.

Defence-to-airport-detection firm Smiths as well as Hika Pharmaceuticals could also both bounce back to the main market, after being relegated in the last reshuffle three months ago.

The cut-off date for the quarterly review is Tuesday, with an official decision to be made the following day.

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