Norwegian Cruise Line Holdings, Ltd (NCLH), the world’s third largest cruise shipping group, has lowered its guidance for full year earnings and abandons.
The company cuts its earnings per share (EPS) forecast for this year to the range of $3.35 to $3.45 from a forecast of $3.65 to $3.85 in its first quarter interim report.
NCLH expects net yields to increase by 1.0% in as reported terms compared to a forecast of a 3.5% rise in the previous interim report.
“As a result of its revised expectations, the Company no longer expects to achieve its previously stated target of $5.00 Adjusted EPS in 2017,” NCLH said in a statement.
"Although we experienced significant booking headwinds we delivered earnings consistent with expectations, generating Adjusted EPS growth of 20% for the first half of the year. As we enter the second half of the year, we are revising our earnings expectations primarily as a result of four factors: continued weak demand from our core North American consumer for European sailings at a time when half of our fleet is deployed in the region, including eight of our highest yielding ships; the effect of a weaker British pound post the Brexit vote; an adjustment to earlier pricing expectations for Miami-based Caribbean itineraries, which continue to outperform prior year despite a doubling of capacity in the low season months; and the impact from maintaining pricing discipline to minimize discounting," said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings.
"With this revision to expectations, we are confident we will deliver strong earnings growth for full year 2016 and grow 2017 Adjusted EPS in the range of 15% to 25%," he said.
Norwegian Cruise Line Holdings, Ltd, (NCLH) the world’s third largest cruise shipping group, has reported a fall in second quarter net profit on higher operating expenses, but the profit rose in the first half of the year.
Group net profit fell to $145.2 million in the second quarter from $158.5 million in the same period last year, as operating expenses increased by $42 million. Revenues rose to $1.19 billion from $1.09 billion.
In the first six months of the year, the profit rose to $218.5 million from $137.0 million. Revenues increased to $2.26 billion from $2.03 billion, the company said in a statement.
Adjusted Net Yield increased 1.2% on a Constant Currency basis or 0.8% on an as reported basis on Adjusted Net Revenue of $917.8 million
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day increased 4.1% on a Constant Currency basis or 4.0% on an as reported basis. The increase was primarily due to four scheduled Dry-docks in the quarter compared to one in the prior year.
"While successive geopolitical events dampened North American consumer demand primarily for our Mediterranean itineraries, our management team worked diligently to identify cost saving opportunities to partially mitigate these impacts and generate solid Adjusted EPS growth of 13%," said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings.
"It was a challenging booking environment where we remained mindful of our go to market strategy to minimize discounting and maintain our hard-fought pricing gains, resulting in lower occupancy, which in turn lowered onboard revenue and overall Net Yield growth compared to our expectations earlier in the year, " he said.
Lindblad Expedition Holdings, Ltd., the listed expedition cruise operator, has plunged to a loss in the second quarter as the cost of dry dockings exceeded a rise in net yields.
Group net loss in the second quarter of the current year amounted to $4.9 million compared to a $8.8 million profit a year earlier. Revenues rose to 453.8 million from $49.5 million.
In the first six months of the year, Lindblad’s net profit narrowed to $5.9 million from $15.7 million. Revenues rose to $115.5 million from $104.9 million.
Net yield in the quarter for the Lindblad segment amounted to $999 as compared with $963 in the second quarter of 2015. The increase in Net yield was primarily related to price increases, the company said in a statement.
The Lindblad segment had 41,213 Available Guest Nights in the second quarter of 2016 compared with 44,193 in the prior year quarter, and an occupancy rate of 92.0% in the second quarter of 2016 compared with 91.9% in the 2015 quarter.
Adjusted Net Cruise Cost per Available Guest Night for the Lindblad segment amounted to $858 in the second quarter of 2016, as compared with $691 for the same period in the prior year. The increase was primarily driven by higher cost of tours due to the additional drydock days and more extensive maintenance work during the drydocks, as well as an increase in charter hire expense related to additional voyages
“In 2016, both of our blue water vessels, the Explorer and the Orion were drydocked in contrast to 2015 when only one vessel was wet docked for a much shorter period. Our drydock schedules are subject to cost and timing differences from year to year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions, and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically, “ said said Sven-Olof Lindblad, President and Chief Executive Officer of Lindblad.
“The combined effect of lower revenue from fewer operating days and the operating costs of these planned drydocks is the key factor with regard to the year-over-year comparison of revenue and EBITDA in the period,” he added.
“We are currently at 94% of projected guest ticket revenues for 2016 as of July 31, 2016, compared to 103% in the same time in 2015 for the 2015 fiscal year, a reduction of approximately $5.3 million. The reduction is primarily for voyages during the fourth quarter” Lindblad continued.
“We have employed a variety of tactical marketing opportunities for this period to counteract effects seen in specific geographies relating to concerns over the Zika virus and a slowdown in activity on the National Geographic Endeavour, where segments of our audience are waiting for the introduction of our new vessel, the Endeavour II, for our Galápagos operation.”
“We have historically been adept at isolating challenges and developing an effective tactical response while staying focused on our long-term objectives. However, we may be unable to fully eliminate all the effects of the various challenges we face in the short term,” he concluded.
Following an intensive, six-month evaluation, Crystal Cruises today determined that while the SS United States is structurally sound, the technical and commercial challenges associated with returning the historic liner to service as a modern cruise ship have unfortunately proven insurmountable. As a show of support for the vessel, Crystal Cruises will be making a significant donation of $350,000 to aid in the Conservancy’s ongoing mission to save the ship. The Conservancy intends to resume its pursuit of stationary redevelopment opportunities for America’s Flagship.
In February, Crystal and the SS United States Conservancy announced they had entered into an exclusive option agreement with the goal of converting the iconic 1950’s-era vessel into a modern, luxury cruise ship that would comply with all modern safety and technical standards – unprecedented for a single vessel refurbishment. Crystal commenced a comprehensive feasibility study and professional evaluation, convening a world-class team of engineers and experts while incurring over $1 million in costs.
“Over the past six months, Crystal has conducted an extensive feasibility study to restore 'America's Flagship' to oceangoing service. Unfortunately, the hurdles that would face us when trying to bring a 65-year-old vessel up to modern safety, design and international regulatory compliance have proven just too great to clear in both a technically and commercially responsible manner,” said Crystal President and CEO Edie Rodriguez.
“While it has been determined that Crystal’s exciting vision for the ship would have required overcoming various technical hurdles and major changes to her historic design, the studies performed have confirmed the ship is structurally sound,” said Susan Gibbs, Executive Director of the SS United States Conservancy. “America’s Flagship continues to hold enormous potential as a stationary mixed-use development and museum in New York or another urban waterfront setting. The SS United States Conservancy remains deeply committed to saving this unique and powerful symbol of the nation’s strength, history, and innovation.”
Led by retired U.S. Coast Guard Rear Admiral Tim Sullivan, Crystal’s impressive team of maritime experts and engineers conducted numerous assessments on the ship in the Port of Philadelphia, where it has been docked for 20 years. The evaluation and testing included in-depth assessments of the ship's structural condition; underwater inspections of the hull by divers; the examination of her fuel and salt water ballasting tanks; and a series of intensive engineering studies to deduce what would be needed to bring her back into service.
Regrettably, the technical feasibility study concluded that while the ship is remarkably intact and structurally sound, modifying the ship for today’s standards for oceangoing service (SOLAS) would require significant changes to the hull that would pose stability challenges. Additionally, the installation of a modern, state-of-the-art diesel electric propulsion plant would have necessitated altering of the existing shaft lines and rebuilding about 25 percent of the hull to reconfigure the ship to a twin shaft-twin rudder arrangement. While it was known that the vessel would need to have been essentially rebuilt from the inside out, these specific challenges, among others, collectively posed significant risk to the success of the project.
“Our company has great affection for this historic and irreplaceable vessel, and we will be making a $350,000 donation which will help support the Conservancy preserve the vessel through the remainder of the year,” said Rodriguez. “We firmly believe the SS United States is an American treasure and deserves to be preserved and redeveloped as a stationary destination for future generations to experience and enjoy.”
The Conservancy will immediately restart its aggressive outreach to qualified developers and investors to secure the ship’s future, while continuing its ongoing mission to educate the public about the legacy of the vessel and building its museum collection and archives. A national reunion of former crewmembers and passengers is planned in Philadelphia on September 17.
“The Conservancy is deeply grateful to Crystal Cruises for recognizing the SS United States’ historic importance and for working so hard on the ship’s behalf,” said Gibbs. “I would also like to thank our members and supporters from across the country and around the world for their continued support. Together we will continue to work tirelessly to save America’s Flagship and honor the legendary liner’s legacy.”
Crystal would like to thank partners and agencies involved in helping complete the feasibility study including: the U.S. Coast Guard; Atlantic Logistics; the U.S. Environmental Protection Agency; the American Bureau of Shipping; the U.S. Maritime Administration; the Seafarer’s International Union and multiple U.S. Congressional committees. Finally, Crystal urges the public to visit www.SSUSC.org to help the SS United States Conservancy continue its efforts to save America’s Flagship and advance its educational and curatorial programs to honor the nation’s only remaining ocean liner.