Alton Towers owner Merlin Entertainment says the rollercoaster incident at the venue in June could affect profits by up to £47million.
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Despite the half-year results sitting in line with expectations, the profit hit being taken in its theme parks business sent Merlin shares down 3.5% to 408.2 pence in mid-morning trade on Monday, the worst performer in the FTSE 100.
Underlying earnings for the theme park division are expected to fall from £87million in 2014 to between £40million and £50million this year, Merlin said.
Cost-cutting and good performances across the group meant that the pre-tax profit would “broadly be in line” with the £249m posted in 2014.
Merlin’s chief executive Nick Varney told the BBC that reducing its marketing activity following the incident was appropriate.
Total revenues grew to £544 million as like-for-like sales rose 2.8 per cent, despite the theme parks division fall of two per cent.
The accident at the Alton Towers Resort led to the temporary closure of the park, the suspension of UK theme park marketing and temporary ride closures at two of the company’s other UK theme parks.
The group blames today’s profit warning on the significantly reduced visitor numbers at Alton Towers and to a lesser extent its other UK theme parks which include Thorpe Park.
‘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.
Merlin Entertainment has made an initial payout to victims to fund their rehabilitation and has stated it was the first accident in the company’s history. I think, hopefully, people believe we have been responsible in the way we have acted.
Mr Varney said promotional efforts to regain momentum in visitor numbers had not been “moving the dial” enough but pushed back against suggestions Alton Towers may be sold off or closed down. They were also affected by the weakness of the euro making the capital a pricier destination relative to the Continent.
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Brown said the downgrade to guidance was larger than Shore Capital had expected, but the broker was encouraged by the better trading elsewhere “and while not trying to trivialise the tragic events, historically theme parks around the globe have recovered relatively quickly from such events”.
