July 31, 2014 / 9:15 AM / 3 years ago

UPDATE 1-Merlin lines up Legoland deals as profits rise

* H1 EBITDA up 14.3 pct to 120 mln stg

* Rev up 11.2 pct to 513 mln stg, lfl up 8.1 pct

* Eyes Legoland deals in South Korea, China and U.S. (Writes through, shares, quotes)

By Neil Maidment

LONDON, July 31 (Reuters) - Britain’s Merlin Entertainments said it was in advanced talks to open more Legoland Parks overseas after a sales surge at its U.S. sites on the back of “The Lego Movie” helped boost first-half profits.

Merlin, the world’s No.2 operator of visitor attractions behind Walt Disney, currently makes over 60 percent of sales in Britain and continental Europe but is aiming to generate a third from Europe, the Americas and Asia Pacific with a raft of new attractions opening.

Six of its smaller short-stay attractions, including Madame Tussauds and Sea Life Centres, will open in 2014/15, with a further eight slated for the following financial year, and the firm said talks are ongoing to add more much larger Legolands.

“The performance of our existing estate and successful launches of Legoland Florida and Legoland Malaysia have given us even greater confidence in the prospects for rolling out Legoland Parks,” Chief Executive Nick Varney said on Thursday.

“We’ve been working on Legoland South Korea for some time ... we are close but not quite there yet. In terms of other projects ... It is fair to say we are quite advanced on a couple of projects in China as well as looking at sites in America.”

A U.S. site would be the group’s third park in North America and Varney said it was considering two locations on the north eastern seaboard, Lego’s biggest market.

The group, which sees an opportunity for 20 Legoland Parks worldwide, will open in Dubai in 2016 and said last month a Legoland Japan would open in Nagoya in the second quarter of 2017, its seventh Legoland globally.

Varney was speaking after the firm, which listed on the London stock market in November, posted a 14.3 percent rise in core earnings for the 26 weeks to June 28, to 120 million pounds at constant currency, in line with market forecasts.

Revenue rose 11 percent to 513 million pounds as improved weather in Northern Europe boosted visitor numbers to its theme parks, with a strong showing from Legoland in the United States, where the movie and related marketing helped sales surge.

That performance helped offset weaker trade in its short-stay arm, with political unrest in Thailand and severe cold weather in the United States early in the year hitting demand.

On a reported basis, core earnings rose 7.5 percent with revenue up 6.1 percent due to the impact of the strength of sterling against its key foreign currencies.

Merlin said July trading had met expectations and it was on track to hit annual forecasts, despite expecting second half like-for-like sales to slow from first half growth of 8.1 percent due to tough comparative figures.

The firm is expected to post full-year core earnings of 403 million pounds, according to a Reuters poll of 13 analysts.

“Although a strong first-half, it represents only around 18 percent of our full-year pretax profit forecasts and the next two months are key,” Citigroup analyst James Ainley said.

Shares in the group were marginally down at 349.4 pence at 0820 GMT, 11 percent above the 315p offer price. (Editing by Catherine Evans)

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