Alton Towers: rollercoaster accident could cost £47 million
City Index July 27, 2015 5:36 PM
<p>The accident in June resulted in five people being seriously injured and a temporary closure of the park.</p>
A rollercoaster accident in June could affect profits at Alton towers by as much as £47 million, it has emerged.
Merlin Entertainment, which owns the theme park has said that the incident had "an adverse impact on trading" at the start of the summer trading period.
Four people were seriously injured in the accident on June 2nd after a car with 16 passengers on the Smiler ride collided with another, empty, car. Many of the passengers were trapped on the ride, at a 45-degree angle, for several hours and those taken to hospital suffered various injuries, mainly to the lower limbs. The park closed for four days following the incident in order to carry out a full investigation.
Merlin also suspended marketing for the theme park in the UK and temporarily closed rides at two other sites.
In the company's recent statement, the company said that profits for the theme parks division are expected to be between £40 and £50 million in 2015, compared to £87 million last year.
However, the firm also noted that its cost savings efforts, combined with better-than-expected trading across the wider group, meant that annual underlying pre-tax profits would be "broadly in line" with last year's £249 million.
An appropriate reaction
Commenting on the latest results, chief executive Nick Varney said that a significant reduction in market activity for the company's UK theme parks was an appropriate reaction after the accident in June. He also said he was confident that Alton Towers would regain its reputation as the "nation's favourite theme park".
In a statement, the company said: "We have committed to support those injured as best we can and implemented additional safety protocols to be sure that a similar accident will never happen again."
Merlin's first-half financial results are due to be released on Thursday (July 30th). Ahead of this, Merlin has stated that underlying pre-tax profit was up £9 million to £49 million. The company has also said that revenue has gone up 2.8 per cent on a like-for-like basis to £544 million.
Shares in the company fell more than seven per cent in early trading to 392p, However, the stock is still up around 20 per cent compared to when it floated in November 2013.
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