Terrorism Fails to Dampen Outlook at London Eye Owner MerlinBy
Theme park operator expects to meet full-year profit estimates
Attacks reduced London demand ‘immediately and significantly’
The operator of the London Eye and Madame Tussauds waxworks says it expects to meet profit estimates, even after a series of U.K. terror attacks led to a slide in the number of day-trippers visiting the British capital.
With about two-thirds of revenue coming from outside the U.K. and new attractions opening in China and India, Merlin Entertainments Plc is optimistic it can overcome a sudden drop in domestic demand that followed attacks in London and Manchester.
“We anticipate delivering full-year profits in line with current expectations,” the company said as it reported first-half earnings slightly ahead of analysts’ estimates. Its shares gained as much as 2.8 percent.
Domestic demand in London reduced “immediately and significantly” following the U.K. attacks, Merlin said Friday. The number of Britons taking day trips to London fell 4 percent from January through May, Chief Financial Officer Anne-Francois Nesmes said on a conference call, citing industry data.
Merlin, which also operates the London Dungeon and London Aquarium, fared better than others, the CFO said. Visitors to the capital’s main museums fell 7 percent to 9 percent, she said, adding: “We were nowhere near that.”
The downturn in domestic trips was offset by a 20 percent increase in London’s international tourism as the Brexit-induced weakness of the pound gave foreign visitors extra spending power. That boost is set to wane as the impact of terror concerns starts to filter through.
“We remain cautious on international visitation over the key summer trading period, given the lag between international bookings and visitation,” Merlin said.
To counter such risks, the Legoland operator is expanding outside the U.K. A new Madame Tussauds is due to open in Delhi in the second half, following the recent addition of attractions in Melbourne, Chongqing and Berlin. Merlin is waiting for consent from the local planning board for a Legoland park near New York.
“We’re positive that it will come through in the later part of this year,” Nesmes said.
First-half earnings before interest, tax, depreciation and amortization rose 15 percent to 144 million pounds ($189 million), beating a company-compiled consensus estimate of 142 million pounds. Merlin traditionally makes less than a quarter of profit in the first half, which ends before the start of Europe’s peak holiday season. For the year, analysts expect Ebitda of about 493 million pounds, according to estimates compiled by Bloomberg.