Alton Towers operator Merlin Entertainments PLC (LON:MERL) posted a 3.6% rise in 2016 profits, beating market expectations, and said it remains confident for the year ahead, although its shares fell back on some profit-taking.
Europe's leading, and the world's second‐largest visitor attractions operator reported pre-tax profits of £277mln for the year ended December 31, up from £250mln in 2015, and above the consensus forecast for £273mln.
The FTSE 100-listed firm saw its 2016 revenues grow by 11.7% to £1.457bn, up from $1.278bn in 2015 - ahead 3.6% at constant currency - reflecting the diversified nature of its portfolio which includes Madame Tussauds and Legoland.
Visitor numbers at its attractions rose by 1.3% to 65.1 mln in 2016, up from 62.9 mln in 2015.
The group said recovery was well underway at Alton Towers, which was impacted by a crash on its Smiler roller-coaster in June 2015, with strong performances from its wider Resort Theme Parks estate.
Planning prudently …
Nick Varney, Merlin’s chief executive officer, said: "Our performance in 2016 is testament to the benefits of our strategy of portfolio and geographic diversification, with over 70% of our profits coming from outside of the UK.
“We have seen the continuation of a recovery in Resort Theme Parks, steady growth in LEGOLAND Parks and a strong contribution from New Business Development.
“The external environment continued to present challenges in a number of our key markets although the impact of this was offset to some degree by cost control measures taken during the year.”
He added: “Whilst we are planning prudently, we remain confident of a good performance in the year ahead."
The firm hiked its dividend to 7.1p, up 9.2% from the 6.5p paid in 2015.
Profit-taking ...
However, in early trading, Merlin shares were down 1.9%, or 9.2p at 488.1p.
Richard Hunter, head of research at Wilson King Investment Management, commented “Merlin has not quite provided the magic, but has nonetheless produced a display which bodes well for forthcoming years.”
He added: “ Meanwhile, with 70% of Merlin’s profits coming from overseas, the weakness of sterling has provided a double whammy boost, in terms of both improved quality of earnings from abroad, as well as the cheaper pound driving an increase in tourism to the UK.”
Hunter concluded: “The shares may have succumbed to some profit taking in early trade despite the resilience of the numbers, with the price having risen 15% in the last three months alone.
“Even so, with an upbeat outlook and strategic expansion on plan, the market consensus of the shares as a buy is likely to remain undisturbed.”
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