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Genting Hong Kong warns of deep 2016 loss on asset depreciation, start up costs of Dream Cruise and MV Werften

Genting Hong Kong, the rapidly expanding Hong Kong based cruise shipping group, has warned that it will report a deep loss for 2016 due to depreciation of assets for sale and start up costs of its dream Cruise premium market brand plus MV Werften shipyards in Germany.

Based on the preliminary assessment of the latest unaudited financial information, excluding the share of results of Travellers, the group is expected to record a consolidated net loss in the range of US$500 million to US$550 million for the year ended 31 December 2016, as compared with a consolidated net profit of US$2.1 billion, excluding the share of results of Travellers, for the year ended 31 December 2015, the company said in a statement.

“Such expected decline in the consolidated net results of the Group is mainly attributable to a number of factors including: (i) the absence of a one-off accounting gain of US$1,567.4 million recognised arising from the reclassification of the Group’s investment in Norwegian Cruise Line Holdings Ltd. (“NCLH”) from “Interest in associates” to “Available-for-sale investments” in 2015 and a total gain of US$658.6 million arising from the disposals of certain stakes in NCLH in 2015 as disclosed in the Company’s announcements dated 9 March 2015, 21 May 2015, 12 August 2015 and 16 December 2015; (ii) an impairment loss of approximately US$300 million on the Group’s available-for-sale investment of its interest in NCLH ordinary shares caused by a decline in its fair value in late 2016; (iii) one-time start-up and marketing costs for the launch of new Dream and Crystal cruise brands and products in 2016; (iv) additional depreciation and amortisation mainly from new Dream and Crystal cruise ships and newly acquired German shipyards; and (v) start-up, reorganisation and acquisition related costs arising from its shipyard operations and newbuilding activities,” the company said.

Despite the decline in its consolidated net results, the Group is expected to record an improvement on its underlying cruise business excluding the one-time start-up costs of its new Dream and Crystal cruise ships.

“The Board wishes to remind investors that the Company is still in the process of finalising its consolidated results for the year ended 31 December 2016 and the above comparison did not take into account the Group’s share of results of Travellers as Travellers is a listed company on an overseas stock exchange and its results have not been announced,” Genting said, adding that it will consider making a supplemental announcement for the Company, if necessary, after the results of Travellers is announced.

 

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