alton towers crash
Crews from the West Midlands Ambulance Service rescuing those trapped on the Smiler rollercoaster at Alton Towers Resort where two carriages crashed. West Midlands Ambulance Service

Merlin Entertainment has issued a profit warning following the Smiler rollercoaster crash on 2 June at its Alton Towers entertainment park, saying the incident has severely hit sales.

The firm said the temporary closure of the park after the crash and the reputational damage suffered by Alton Towers mean its half year theme park profit is now expected to be between £40m-£50m, 43%-54% down from last year's figure of £87m (€121.9m, $135.1bn).

Overall profit, however, is expected to be in line with expectations.

"As a result of the accident, we took the immediate decision to close the park and temporarily suspend a number of rides across the UK Resort Theme Parks estate," chief executive Nick Varney said.

"We firmly believe that this was the right course of action reflecting the seriousness of the incident, the impact on our staff, and to allow the team to focus on supporting all those affected and on the implementation of the new safety protocols, where necessary."

In addition, Merlin has suspended advertising for its theme parks and it said it is working on re-engagement with its customers.

The company, which also owns the London Eye and operates numerous tourist attractions in the UK, such as London Sea Life and Madame Tussauds, has seen its share price fall by more than 10.4% since 2 June, when two Smiler carriages crashed into each other in theme park Alton Towers.

The company is due to report its half year results on 30 July, which will shed further light on the financial impact of the crash, but the consensus is that the incident will affect Merlin's balance sheet for a longer period as traffic decreases and the company's image is tarnished.

"The tragic June 2 roller-coaster accident at Alton Towers will have on divisional and group full-year profitability," Michael van Dulken, analyst at Accendo Markets said. "More bad news is that the negative effects could well still be felt into 2016, suggesting significant image and reputational damage."

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