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Roller coaster crash set to cost owner, Merlin Entertainments, $73M

A popular U.K. attractions operator has issued a profit warning ahead of its interim results this week, after a roller coaster incident at one of its theme parks.

Merlin Entertainments, owner of LEGOLAND, Madame Tussauds and London Eye, has said it expects earnings (before interest, tax, depreciation and amortization) could be as low as £40 million ($62 million) for its theme parks division, compared to £87 million in 2014, ahead of its first half results this Thursday.


"The Smiler" rollercoaster, at Alton Towers Resort, U.K.
Christopher Furlong | Getty Images Europe | Getty Images
"The Smiler" rollercoaster, at Alton Towers Resort, U.K.

The theme park operator attributes this dramatic loss in profits to a roller coaster crash at one of its theme parks, Alton Towers Resort, in June.

On June 2nd 2015, four people were seriously injured after two carriages collided on "The Smiler" roller coaster at Alton Towers, Staffordshire. Leah Washington, aged 17, had her leg amputated following the crash. The Smiler has since remained closed.

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On top of the ride's closure, Alton Towers Resort remained shut for days following the incident, while other rides across two other theme parks were temporarily shut. Marketing for Merlin's theme parks was reduced significantly too.

"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," Merlin Entertainments said in a statement, who added that it was taking action to re-engage with its customers.

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The group expects that this financial hit on the theme parks' profitability may continue in 2016.

The weaker euro had an impact on visiting numbers when it came to Merlin's London attractions, which includes Madame Tussauds and the London Eye.

However, LEGOLAND saw strong momentum, which was driven by successful launches of new products and its continuing strength from its two U.S. parks.

Nick Varney, CEO of Merlin Entertainments, said in a statement that they had accepted their responsibility for the Alton Towers accident and felt that, in time, it would rebuild its position as "the nation's favorite theme park."

Stock of Merlin Entertainments tumbled as much as 7.8 percent in early trading, its worst ever one-day drop. The stock pared some losses to close down 4.3 percent, near the bottom of the FTSE 100 index.

Merlin Entertainments is expected to report its interim results this Thursday, July 30th.

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—By CNBC's Alexandra Gibbs, follow her on Twitter @AlexGibbsy.