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Merlin Entertainments blamed a series of setbacks at its Legoland theme parks for a disappointing trading performance in the division.
The expected promotional bounce from the release of The Lego Movie 2 in February failed to appear and Legoland also suffered from poor weather, particularly in California. These factors plus other cost pressures led to a 4.6 percent fall in underlying operating profit to $75 million (£62 million).
While Merlin, which is in the process of being taken private, might be undergoing short-term challenges with some of its brands, the company is looking toward the future. One of the reasons for the acquisition was the need for further investment in its portfolio of theme parks, with the theory being this is much easier away from the glare of the stock market.
Revenue at Legoland actually grew in the period by 8 percent to $358 million (£296 million) thanks to the roll out of new accommodation – and this remains a key pillar of Merlin’s overall strategy. On a like-for-like basis, however, revenue fell 0.7 percent.
“The consortium recognises that significant, long-term investment is required to ensure the longevity of the existing assets and to drive continued growth for Merlin and its stakeholders,” the prospective owners, which include the family behind Lego, said a takeover document.
Challenges at Legoland fed in to Merlin’s overall first-half performance. Pre-tax profit dropped 26 percent to $39 million (£32 million). Revenue actually increased 8 percent to $924 million (£763 million) but so too did costs with Merlin singling out those relating to staff.
“With eight new Midway attractions opened in the period, 372 new accommodation rooms, and the ongoing development of new Legoland parks, we continue to build on our position as a unique, multi-format international operator of strongly branded and IP-led location based entertainment, said Nick Varney, Merlin’s CEO.
Merlin expects the takeover to be completed in the final quarter of 2019.