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Alton Towers owner Merlin warns of £50m profits hit after Smiler crash

Published 27/07/2015

Merlin said the Alton Towers rollercoaster crash has had
Merlin said the Alton Towers rollercoaster crash has had "an adverse impact on trading at the start of the critical summer period"

The boss of Alton Towers owner Merlin said the theme park could take 18 months to recover as the group warned of a £50 million profits hit following a major rollercoaster accident.

Five people were seriously injured after the crash last month which resulted in the park being shut down for four days.

Merlin also suspended UK theme park marketing and temporarily closed rides at two other sites.

The group said it had "an adverse impact on trading at the start of the critical summer period" as it marked down earnings expectations from its theme parks division for this year to £40 million to £50 million, from £87 million in 2014.

A £40 million result would represent a £50 million shortfall on the £90 million-plus figure that the City would have been expecting for this year.

Merlin added that the there may also be "some continued adverse impact" on its theme parks' profits into 2016. Shares dived by as much as 9% in early trading but later pared back some of their losses.

Chief executive Nick Varney declined to spell out the precise impact of the crash on visitor numbers at Alton Towers but said there had been "a substantial reduction in what the park was doing prior to the accident", plus a lesser hit to Thorpe Park.

Mr Varney said promotional efforts to regain momentum had not been "moving the dial" enough but brushed off the question of whether Alton Towers might ever need to be sold off or closed down.

"I don't think there is any danger of that whatsoever. Alton Towers is a highly successful business.

"The truth of the matter is that the biggest factor in this is the momentum.

"Just at the point when we should have been going at full throttle, effectively stopping the engine, and doing the things we have to do."

He said there had understandably been safety concerns.

But Mr Varney added: "At the end of the day we have had one accident in the history of this company. I think, hopefully, people believe we have been responsible in the way we have acted.

"In 12 to 18 months' time I believe Alton Towers will be back where it was."

He said that investigations into the accident continued and a decision on the future of the Smiler rollercoaster where it took place would be made "in due course".

Mr Varney said Merlin was "deeply sorry" over the crash, which he described as a "devastating event" and would continue to do what it could to support those who were injured and their families.

He said shutting down the park and suspending rides at other sites had been "the right course of action reflecting the seriousness of the incident". New safety procedures had been implemented where necessary.

The wider group - which also operates attractions such as Madame Tussauds and Legoland parks - is expected to see profit before tax "broadly in line" with last year at £249 million this year after savings in financing and other costs.

Today's statement from Merlin came ahead of half-year results due to be released on Thursday, showing visitor numbers across the group up to 27.7 million compared with 27.5 million last year.

But pre-tax profits for the six-month period ending June 27 were 10% lower at £36 million.

Total revenues grew to £544 million as like-for-like sales rose 2.8% but the theme parks division saw a like-for-like fall of 2%.

Legoland saw a strong performance driven by its two US parks while other attractions in Asia and Europe also did well.

But London sites were hit by lower visitor numbers from Hong Kong, blamed on travel restrictions for tourists from China. They were also affected by the weakness of the euro making the capital a pricier destination relative to the Continent.

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