Merlin Entertainments posts growth despite lingering impact of terror attacks

Merlin Entertainments reported “in-line” revenue growth on Tuesday, despite lingering challenges to its central London attractions after last year’s terror attacks.

Merlin boss Nick Varney told the Press Association that London’s tourist trade has been badly hit by the attacks, and it will take “some time” to return to 2016 levels.

Shares in the company were down 7.7% in early trading.

Revenue grew 4.7% on an organic basis in the 40 weeks to October 6 2018, or 2.6% on a reported basis.

London Dungeon
London Dungeon

Growth was driven by new business development, which includes the launch of two new brands: Peppa Pig World of Play and The Bear Grylls Adventure.

Resort theme parks also benefited from the warm weather in Europe, with revenue up 9% in the division.

But the heatwave added woes to the midway division, which comprises indoor city centre attractions such as Sea Life, Madam Tussauds and The Dungeons. Revenue in the division was down 0.7%.

Merlin said its London sites continued to feel the impact of last year’s terror attacks, but that the market is beginning to recover.

Sea Life
Sea Life

Chief executive Nick Varney told Press Association that although London tourism was picking up again, “it will still be some time before we get back to the position of late 2016”.

Legoland Parks posted organic revenue growth of 6.4%, but suffered from the lack of a new Lego movie release. Like-for-like growth was flat.

Mr Varney said that the parks are likely to benefit from the release of The Lego Movie 2 early next year.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said it was “worrying” that Legoland’s performance was weaker.

He said: “It would be a mistake to lose sight of Merlin’s long-term strengths – namely an increasing demand for experiences over material goods and some excellent brands – but the group is undeniably going through a rough patch.”