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Carnival Corporation to develop $70 million port facility in Tortuga, Haiti

"Carnival Corporation & plc signed a memorandum of understanding on July 31, 2014, that calls for the development of a new cruise port in Tortuga, an island just off the northern coast of Haiti," says David Candib, Vice President, Development & Operations, Global Port & Destination Development Group at Carnival Corporation & plc.
 
"The amount of investment, per the Letter of Intent, is $70 million and represents the largest cruise industry investment ever made in Haiti, providing a new and exciting destination for ship itineraries traveling in the Caribbean. This also represents a major commitment to the people of Haiti by Carnival Corporation - the largest cruise company in the world, with nine industry-leading brands and dozens of ships operating in the Caribbean, the world's most popular region for cruise vacations.
 
The development will create an exciting opportunity for our guests to enjoy a new, secluded and stunning destination on the island of Tortuga that the company expects will become a highly popular place for guests to enjoy for years to come. At the same time, this commitment will initially stimulate significant development and construction activities, and then tourism business once the port is open, that will create a tremendous economic impact for the people of Haiti. Our initial estimates indicate we will employ more than 900 people directly and indirectly, and the project will be an anchor for further development on the island. We are working together with the Haitian people and government to build Tortuga into a popular and economically sustainable Caribbean destination.
 
This commitment to Haiti is part of Carnival Corporation's larger investment in the Caribbean as a whole. The Caribbean is a crucial market for the success of Carnival Corporation and the cruise industry in general - and we remain committed to creating new and exciting products in the region. The Caribbean is not only the most popular region for cruise vacations, but it is also where Carnival Corporation's roots are, and where the company's nine brands deploy a large number of ships and set sail with millions of guests every year.
 
As we work to develop more diverse itineraries in the region, this new port will complement other popular destinations in the area, including our other Carnival-owned ports of Mahogany Bay, Half Moon Cay, Grand Turk, Puerta Maya and Amber Cove, another new Carnival Corporation port being developed in Puerta Plata, founded by Christopher Columbus on the north coast of the Dominican Republic and scheduled to open with much anticipation in 2015."

TUI Cruises orders two ships, with two options, at Meyer Turku Yard

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Photo credit: Jouni Saaristo

TUI Cruises has agreed to order two more ships from Meyer Turku Yard, now sold to a consortium of Meyer Werft and the Finnish government, the Finnish minister of the economy and employment told a news conference.

The ships would be similar to the two 99,300 gross ton vessels the company has ordered from the Finnish builder before; Mein Sciff 3 was delivered in the spring and Mein Schif 4 is due to enter service in the spring of 2015.

The exact price of the orders was not disclosed, but the figure would be in the region of €1 billion, Vapaavuri stated. Securing future workload for the yard was a key part of the acquisition of the yard by Meyer Werft and the Finnish government, which was also unveiled today.

TUI Cruises is joint venture between Royal Caribbean Cruises Ltd (RCCL) and TUI AG, the German tourism company.

Meanwhile, TUI Cruises said in a statement TUI AG and Royal Caribbean Cruises are substantiating their expansions plans for the company. The Mein Schiff fleet shall grow from now three to six ships and then 14,000 beds by 2017. TUI Cruises is strengthening its already sound and dynamic position in the German cruise market.

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Photo credit: Jouni Saaristo

Both the Boards of TUI AG and Royal Caribbean Cruises have decided to order the two newbuilds. The Mein Schiff 4 is currently being built and with the now decided new orders of Mein Schiff 5 and Mein Schiff 6 TUI AG and Royal Caribbean Cruises are investing in touristic growth markets. The parent companies of Hamburg-based TUI Cruises expect a sustained high demand in the cruise sector and therefore, in good time, came to the decision to expand further.

Friedrich Joussen, CEO of TUI AG: "In Germany and in Europe the interest in cruises is increasing. The Mein Schiff fleet of TUI Cruises has set a new premium standard in the market and it won new target groups for cruise holidays. The ships are excellently booked to capacity and the company is growing. TUI Cruises and its vessels are a pivotal pillar for our differentiation and growth strategy. Cruises meet the trend and are being discovered by new customer segments." At the presentation of the TUI AG half-year results Joussen had already called the prospects for the cruise segment as highly attractive and alluded to an expansion of the Mein Schiff fleet. This expansion is now being turned into action with the two vessels on order.

Only recently, in June 2014, the Mein Schiff 3 as the first newbuild of the fleet was commissioned by TUI Cruises. Already prior to the launching ceremony on 12 June, the vessel had been nearly fully booked.

The now decided two more ships are on order and expected for delivery as soon as 2016 and 2017. The new cruise liners will be sister ships of the previous newbuilds Mein Schiff 3 and Mein Schiff 4: 295 metres long spanning 15 decks with 1,250 cabins. The majority of the "well-being" ship s cabins, 90 per cent, will be outside cabins with 82 per cent having balconies. The 99,300 Gross Registered Tons (GRT) new build will carry approximately 2,500 guests based on double occupancy.

Both new ships will be built at Meyer Turku Yard, Finland, the majority of which will be in hands of Meyer Werft GmbH. This acquisition is subject to approval by the cartel authority and financing. Richard J. Vogel, CEO TUI Cruises: ''We are pleased that a positive outcome of the negotiations between STX and MEYER WERFT has been achieved. This step ensures that TUI Cruises keeps the valuable know-how of the shipyard. It is the foundation to successfully enlarge the unique cruise products of the Mein Schiff fleet." As Managing Director Richard J. Vogel was responsible for building up TUI Cruises from the very start. By 1 October he will be succeeded as CEO of the Hamburg-based cruise company by Wybcke Meier.

 

Meyer Wert to acquire 70%, Finnish Government 30% of STX Finland Turku yard

Meyer Werft, the German shipbuilder, and the Finnish government have reached an agreement with STX Offshore & Shipbuilding, the South Korean owner of STX Finland and its Turku yard, to jointly acquire all shares in the Finnish company. Meyer Werft will own 70% and the government 30% of the shares, it emerged at a press conference held by Jan Vapaavuori, minister of the economy and of employment.

The price of the acquusition would not be disclosed, Vapaavuori said, adding that financial situation of STX Finland's Turku yard was reflected in the price. The company would be renamed Meyer Turku Yard.

Teollisuussijoitus, a Finnish government owned investment company, will own the shares the government has acquired. The seller is STX Europe, a fully owned subsidiary of STX Offshore & Shipbuilding, Vapaavuori said.

Vapaavuori said the ministry started efforts to solve the crisis at Turku in the spring of 2013. Meyer Werft emerged as a buyer candidate in November of last year. While talks with Meyer Werft progressed well, it was difficult to convince the South Korean owner of the Finnish yard about the seriousness of the inentions of the potential buyers.

A new company has been formed, in which Meyer Werfgt owns 70% of the shares and Teollisuussijoitus 30% of the shares. Teollisuussijoitus would exit the business in due time. The new company would recapitalise the yard.

Vapaavuori said that for a long time, the Turku yard has had a number of owners that have not been committed in the developing of its business. With Meyer Werft, such an owner has been found. 

Princess Cruises orders a new ship from Fincantieri

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Princess Cruises, a subsidiary of Carnival Corporation & plc, has reached an agreement with the Italian shipbuilder Fincantieri to build a new ship, which will  enter service in 2017.

The as-yet unnamed 143,000-ton vessel, which will be built at an all-in cost of approximately 600 million euros, will carry 3,560 passengers, and feature the successful design platform introduced by sister ships Royal Princess in 2013 and Regal Princess which entered service this past May.

The new ship will include the signature elements that have become synonymous with the Princess Cruises guest experience such as a soaring central atrium hub with multiple dining, entertainment and retail venues; the adults-only Sanctuary; Movies Under the Stars cinema experience, and 80 percent of all staterooms with balconies. The ship will also include some brand-new innovations to enhance the guest experience even further.

 “We are incredibly excited to add this fabulous new ship to our already formidable fleet,” said Jan Swartz, Princess Cruises president. “Royal Princess and Regal Princess have been exceptionally successful for us and have received numerous accolades from guests, travel agents and media, so adding another sister ship will enable us to continue to expand our innovative vacation experiences. We’re very pleased that this new ship order is an indication of the confidence that our parent Carnival Corporation has in the future of the Princess brand.” She added that this is the only new order Carnival Corporation & plc anticipates for 2017.

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Specific features and amenities for the ship, along with deployment details, will be revealed in the coming months.

Giuseppe Bono, Fincantieri Chief Executive Officer, commented: "All the orders we win are important for our Group, but some are more special than others. The one we're announcing today certainly belongs to this select category. In fact, it's no coincidence that Fincantieri is the universally recognized leader among the builders of cruise ships. It's a source of great pride to be able to immediately build another ship for a prestigious brand like Princess Cruises following the successful deliveries of two jewels like "Royal" and "Regal," which have already become part of maritime history." Bono ended by saying, "Our objective has always been to build ships of the future, and thanks to the Carnival Group, the leading market player, which has reconfirmed its well-founded confidence in us, we have proven over time not only to have kept faith with this ambitious goal but also to have been able to consolidate our world leadership in a sector of absolute technological excellence, like cruise ships."

Norwegian Cruise Line reports financial results for the second quarter 2014

Norwegian Cruise Line today reported results for the quarter ended June 30, 2014, and provided guidance for the third quarter and full year 2014.

“This quarter marks the first full quarter with both Breakaway-class ships in operation,” said Kevin Sheehan, president and chief executive officer of Norwegian Cruise Line. “Along with Norwegian Epic, these newer, premium, earnings-rich ships now comprise a little over a third of our capacity and contributed to the doubling of earnings in the quarter” continued Sheehan.

For the second quarter of 2014, the Company reported Adjusted EPS of $0.58, on Adjusted Net Income of $121.1 million, compared to $0.29 for the same period in 2013.  On a GAAP basis, diluted earnings per share and net income were $0.54 and $111.6 million, respectively.

Net Revenue in the period increased 23.6% to $595.7 million driven by a 19.6% increase in Capacity Days and a 3.3% improvement in Net Yield (3.0% on a Constant Currency basis).  The increase in Capacity Days was primarily from the addition of Norwegian Getaway and Norwegian Breakaway to the fleet in January 2014 and April 2013, respectively, and was partially offset by the planned dry-dock of Norwegian Jewel.  The Net Yield improvement was due to higher Occupancy Percentage, higher onboard and other revenue and benefits from initiatives to reduce our cost of sales.  Revenue for the period increased to $765.9 million from $644.4 million in 2013.

Adjusted Net Cruise Cost Excluding Fuel per Capacity Day decreased 2.3% (2.7% on a Constant Currency basis).  The Company’s fuel price per metric ton, net of hedges, was $622 compared to $686 in 2013. Fuel consumption per Capacity Day in the quarter decreased 5.1%.

Interest expense, net was $31.9 million for the quarter.  Interest expense, net in the same period in 2013 was $103.7 million which included $70.1 million of charges related to the refinancing of certain credit facilities and the redemption of certain of the Company’s senior unsecured notes.  Excluding these charges, Adjusted Interest Expense, net was $33.6 million in 2013.

2014 Guidance and Sensitivities

In addition to the results for the second quarter, the Company also provided the following guidance for the third quarter and full year 2014, along with accompanying sensitivities.

“We are pleased to reiterate full year earnings guidance given the current promotional environment,” said Sheehan.  “We are taking advantage of opportunities to strategically invest in initiatives to increase brand awareness and enhance the guest experience to drive long term returns.”

As of June 30, 2014, the Company had hedged approximately 76%, 59%, and 37% of its remaining 2014, 2015 and 2016 projected metric tons of fuel purchases, respectively.

Future capital commitments consist of contracted commitments, including future expected capital expenditures for business enhancements and ship construction contracts. As of June 30, 2014 anticipated capital expenditures together with amounts for ship construction and related export credit financing were as follows (in thousands, based on the euro/U.S. dollar exchange rate as of June 30, 2014):

Company Updates and Other Business Highlights

The Company recently announced an order for two Breakaway Plus-class ships with export credit financing in place.  The contract price for the 164,600 gross ton, 4,200-berth vessels is euro 1.6 billion, with deliveries scheduled for spring 2018 and fall 2019.  This latest order brings the total number of newbuilds under contract with Meyer Werft to four, with Norwegian Escape scheduled for delivery in October 2015.

In April, the Company announced the authorization by its Board of Directors of a three-year, $500 million share repurchase program.  During the second quarter, the Company repurchased approximately 2.4 million shares at an average price of $33.02 per share under this program.

In May, the Company announced Norwegian NEXT, a two-year, $250 million investment in “new enhancements, experiences and transformations” across the fleet.  The program is aimed at elevating the guest experience through ship revitalizations, enhanced dining and beverage programs, enriched entertainment and destination experiences and technological advances.  The program also includes initiatives aimed at reducing the Company’s impact on the environment, including the installation of exhaust gas scrubbers on six of the Company’s current ships and all four of its upcoming newbuilds.   Fleetwide enhancements to the dining program include new menus with expanded offerings in complimentary dining venues, the rollout of the popular O’Sheehan’s Neighborhood Bar & Grill and Moderno Churrascaria concepts and the addition of Carlo’s Bake Shop treats to cafes across the fleet.  Beverage program enhancements include a new wine list developed in partnership with the Michael Mondavi Family, destination-specific cocktail menus created by the James Beard Award-nominated mixologists at Bar Lab and the expansion of the Sugarcane Mojito Bar concept.  Regarding entertainment, the Company’s new, state-of-the-art rehearsal facility, Norwegian Creative Studios, will be the source for new production shows while the Company expands its Nickelodeon family offerings to include new activities and dining experiences with one’s favorite characters.  Investments in technology include an enhanced pre-cruise booking experience and interactive digital displays positioned in strategic locations throughout every ship allowing guests to reserve dining, shore excursions and other activities.  The Company is also investing in improvements to its private island in the Bahamas, Great Stirrup Cay, with new venues such as the Bacardi Bar while construction continues on its upcoming eco-friendly western Caribbean destination in Belize, Harvest Caye.