Merlin warns on profit after roller coaster crash costs

Britain's Merlin Entertainments, the company behind the Alton Towers theme park, warned that annual profit would be about 9 per cent lower than current forecasts due to the impact of a roller coaster crash in June.

Merlin, the world’s No.2 operator of visitor attractions behind Walt Disney, also warned that profitability in its theme parks unit could also be affected next year.

Merlin said on Monday that the temporary closure of Alton Towers, where the crash took place, and rides at other parks, would result in a £37 million (€52.09 million) to £47 million hit to profit in its theme parks unit this year, compared with last year.

The company guided that pretax profit for the year ended December would now come in at around the same level as last year’s £249 million, with more favourable financing costs offsetting some of the hit from the park closures.

Analyst expectations had been for Merlin, which also runs Madame Tussauds waxworks and London Eye, to make £273 million of profit this year.

“The magnitude of the financial impact is the result of both a significant reduction in revenue and the requirement to maintain an appropriate investment in customer service and marketing through peak season,” the company explained in a statement.

Alton Towers was closed in June while the company introduced additional safety measures following a roller coaster crash which seriously injured four teenagers, and resulted in one of the victims having a leg amputated.

The incident at the park in Staffordshire, central England, one of Britain’s biggest theme parks, occurred when two carriages collided on its “Smiler” roller coaster ride.

Reuters