Managing Your Cash Flow

Alton Towers has issued a £47m profit warning after Smiler rollercoaster crash

3 min read

27 July 2015

An accident on 1 June at Alton Towers, which resulted in four people being injured, led to the temporary closure of the park. This has, according to owner Merlin Entertainments, affected its profits.

The theme park is expected to rake in profits worth £47m, compared to the £87m made in the same period of 2014. The group has suggested that the reduced number of visitors at Alton Towers, including some of its other UK theme parks, are to blame.

In a trading update, the group said the crash had “an adverse impact on trading at the start of the critical summer period.” 

“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,” it said. “Although difficult to assess at this stage, we believe that there may be some continued adverse impact on the resort theme parks operating group profitability in 2016.”

Anna Barnfather, an analyst at Panmure Gordon, said the downgrade had been bigger than expected as Merlin had suspended advertising for all its theme parks. Alton Towers had been closed for five days and rides among its other sites had also been closed.

Merlin said: “The accident at the Alton Towers Resort resulted in the temporary closure of the park, the suspension of UK theme park marketing and temporary ride closures at two of our other UK theme parks. The combination of these factors has significantly reduced volumes at Alton Towers Resort and, to a lesser extent, the UK Resort Theme Parks estate.”

It was further suggested that it shares fell by eight per cent as soon as the markets opened.

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The company said it was taking action “to rebuild momentum and re-engage with our customers” but that it believes its bottom line will continue to suffer into 2016.

Nick Varney, chief executive of Merlin, said Alton Towers could regain its title of favourite theme park in 12 to 18 months. Merlin also indicated the crash could affect results next year as it struggles to rebuild its reputation.

“At the end of the day we have had one accident in the history of this company,” he said. “I think, hopefully, people believe we have been responsible in the way we have acted.”

Merlin said the weak euro had affected the number of visitors to London attractions because the capital was more expensive. It has failed to capitalise as the group underlying profit before tax for the year is expected to be in line with last year’s £249m.