Lego Movie success proves magic for Merlin as revenues increase

York Dungeon
York Dungeon
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Merlin Entertainments, which operates attractions including Madame Tussauds waxworks, Legoland, The York Dungeon and Scarborough Sea Life Sanctuary, reported a rise in first quarter revenue helped by good weather in Europe​.

The group also benefited from the success of ​The Lego Movie, which was the surprise No 1 film at the UK box office in 2014 and will be followed by Lego Batman which is due out in 2017. Merlin reported strong trading at its Legoland Parks as a consequence.

The world’s No 2 operator of visitor attractions behind Walt Disney said underlying sales rose 3.3 per cent in the 18 weeks to May 2 and by 6.5 per cent on a constant currency basis and including contributions from new openings.

​​Group chief executive Nick Varney​ said: “Merlin has had a satisfactory start to 2015.

“Perhaps most importantly however, guests are telling us they love our new products and attractions.

“Looking forward, we are positive on the outlook for the remainder of the year. At this early stage of the season, our full year expectations remain unchanged, although we remain mindful of the potentially negative impact a weaker euro could have on eurozone visitation to the UK.”

Merlin has ambitious expansion plans with new Legoland Parks ​due ​to open in Dubai, Japan and Korea by 2017 as well as short-stay sites such as Dungeons, Sea Life Centres and Shrek-themed attractions.

Those openings will be overseen by a new management team.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said: “Trading during the group’s seasonally quiet period has proved in line with forecasts, and comes against tough 2014 comparatives. The Lego Movie continued to aid its US Legoland Parks, whilst favourable European weather and the ongoing rollout of new attractions such as its Oblivion drop-coaster in Gardaland, Italy have also played their part.”

But he said that on the downside, management points towards the potentially negative impact that a weaker euro could have on eurozone visit numbers to the UK, whilst political unrest and extreme weather provide ongoing potential hurdles for the travel and tourist industry.

​​Merlin aims to generate a third of its revenue from Europe, ​a third from ​the Americas and ​a third from ​Asia Pacific in future. At the moment it is over-reliant on ​​Britain and continental Europe​, which currently make up 60 per cent of sales.

Foreign exchange movements provided a mildly positive impact due to the geographic seasonality of the business, with trading during the period weighted more towards North America. This resulted in total reported revenue growth of 7.2​ per cent​.

​​​Merlin opened the ​Oblivion drop-coaster in Gardaland in Italy in late March and reported strong initial guest feedback.

​It will open Star Wars attractions at Madame Tussauds London and Berlin later this month and a Lego Friends feature will open soon in Windsor, California and Florida.

​The group, which is in the process of turning ​its theme parks into destination resorts, opened 120 ​lodges and five premium tree houses at its Alton Towers Resort under ‘The Enchanted Village’ brand name.

It said the resort has seen “excellent” early bookings.

It will open a 152 bedroom fully-themed hotel at Legoland Florida later this month.

The ​group said its​ financial position remains strong​ and a refinancing ​earlier this year​ reduced financing costs.