Norwegian Cruise Line Holdings Ltd (NCLH), the third largest cruise shipping company in the world, has reported a fall in first quarter profit as costs rose faster than yields.
Net profit fell to $61.9 million from $73.2 million in the first three months of last year, while operating profit also fell, to $119.7 million from $131.2 million. Revenues rose to $1.16 billion from $1.08 billion.
The company said gross yield increased 5.7% while adjusted net yield improved 5.5% on a constant currency basis and 4.9% on an as reported basis.
Gross cruise cost increased 7.9% compared to 2016 due to an increase in total cruise operating expense and marketing, general and administrative expenses. Gross cruise costs per capacity day increased 6.8%.
Adjusted net cruise cost excluding fuel per capacity day increased 5.8% on both a constant currency and as reported basis primarily due to an increase in maintenance and repairs including dry dock and crew payroll and related costs.
Fuel price per metric ton, net of hedges increased 3.4% to $453 from $438 in 2016. The Company reported fuel expense of $88.9 million in the period. In addition, a loss of $0.4 million was recorded in other expense in 2017 related to the ineffective portion of the Company's fuel hedge portfolio due to market volatility.
Interest expense, net decreased to $53.0 million in 2017 from $59.8 million in 2016 reflecting a decrease in average debt outstanding partially offset by an increase in LIBOR rates.
The company also booked another expense of $2.8 million in 2017 compared to income of $2.8 million in 2016. In 2017, the expense was primarily related to losses on foreign currency exchange and unrealized and realized losses on derivatives. In 2016, the income was primarily related to unrealized gains on derivatives partially offset by realised losses on derivatives and losses on foreign currency exchange.
"2017 is off to a solid start with strong first quarter results which include record revenue of $1.2 billion for the quarter," said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd.
"The operating environment has remained favourable with strong close-in demand for Caribbean sailings and strength in onboard revenue driving topline growth above expectations," continued Del Rio.