LONDON (Reuters) - Britain's Merlin Entertainments (MERL.L), operator of tourist attractions such as Madame Tussauds waxworks, remains cautious on the near term outlook for its home market in the wake of recent attacks.
The world's second-biggest visitor attractions group behind Walt Disney (DIS.N), Merlin also runs the London Eye, Legoland and theme parks such as Alton Towers in Britain.
Early this year its London business benefited from an increase in foreign visitors to Britain, reflecting the weaker pound.
While Britain continues to enjoy a tourism boom, it has seen four fatal attacks since March, described by police as terrorism - three in London involving a vehicle driven at pedestrians and a bomb attack in Manchester.
The current official security threat level in Britain is "severe", meaning that more attacks are considered highly likely.
"After the terror attacks we saw an immediate decline in visitation in particular from domestic tourists, so that has caused quite a softening in the UK market," Chief Financial Officer Anne-Francoise Nesmes told an analysts' call on Friday.
She said the group remained concerned that foreign visitors, who typically represent two thirds of Merlin's customers in London, could stay away this summer.
"Ahead of the peak summer season we need to be cautious in terms of what will happen," she said.
Merlin reported flat first half profit but said it still expected to deliver full year profit in line with current expectations. Analysts forecast a pretax profit of 305 million pounds ($401 million), according to Reuters data, up from 259 million pounds in 2016.
Its shares, which had fallen around 13 percent in the past two months, rose as much as 5 percent after the results as investors viewed the impact of attacks had been factored in.
Merlin's business is weighted to the second half of the year and over 70 percent of 2016 profit was generated from outside the UK.
The group made a pretax profit of 50 million pounds for the 26 weeks to July 1, the same as last year, despite a 9.6 percent rise in revenue to 685 million pounds on a constant currency basis.
It said the lack of profit growth was in part due to several adverse timing effects which will normalise in the second half.
Chief Executive Nick Varney pointed to the increasing diversification of the group's portfolio, the ongoing roll out of new attractions and accommodation and a continued focus on productivity and efficiencies.
The group raised its interim dividend to 2.4 pence from 2.2 pence last year.
Its shares were up 2.5 percent at 474.2 pence at 0946 GMT valuing the business at 4.8 billion pounds.
Analysts at Peel Hunt upgraded their stance to "buy" from "hold". "Despite the challenges we believe the share price has fallen to a level from which it is likely to rally," they said.
Editing by Paul Sandle and Susan Fenton