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Carnival reports $1.42 billion third quarter profit, strongest quarter in its history

  • Written by Kari Reinikainen

Carnival Corporation & plc, the Anglo-American cruise shipping giant, says it has reported its strongest quarter ever as net income in the three months to 31 August rose to $1.42 billion from $1.22 billion in the same period last year, while revenues rose to $5.09 billion from $4.88 billion.

In the first nine months of its financial year, the profit increased to $2.17 billion from $1.49 billion as revenues rose to $12.45 billion from $12.00 billion.

Arnold Donald, President and Chief Executive Officer noted in a statement: "We delivered the strongest quarterly earnings in our company's history affirming our ongoing efforts to expand consumer demand in excess of measured capacity increases and leverage our industry leading scale. Revenues during the peak summer season were bolstered by strong performances from both our North American and European brands and across all major deployments including the Caribbean, Alaska and Europe."

Key metrics for the third quarter 2016 compared to the prior year were as follows: Gross revenue yields (revenue per available lower berth day or "ALBD") increased 0.6% . Net revenue yields on a constant currency basis increased 2.7% for the third quarter, toward the top end of the June guidance range of up 2% to 3%

Gross cruise costs including fuel per ALBD decreased 0.2%. Net cruise costs excluding fuel per ALBD on a constant currency basis increased 5.5%, better than June guidance of up 6% to 7%, due to the timing of certain expenses.

Changes in fuel prices (including realised fuel derivatives) and changes in currency exchange rates increased earnings by $0.02 per share, the company said in the statement.

Norwegian yards eye lucrative expedition cruise market, Ulstein offers X-bow designs

  • Written by Kari Reinikainen

Shipbuilders in Norway are eyeing the lucrative expedition cruise market, which has produced orders for eight vessels to the country’s shipbuilders so far this year.

Kleven Maritime group has orders for two expedition cruise vessels from Hurtigruten, a domestic company, while Vard has a contract to build two such vessels to Hapag-Lloyd Kreuzfahrten, which is part of the TUI AG group, and a further four to Ponant, the French expedition cruise ship operator.

Holger Dilling, SVP of Investor Relations and Business Development at the Alesund based Vard group said in a presentation that he expects two more expedition cruise ships to be ordered from the group’s yards before the end of the year.

Fincantieri is the biggest shareholder in Vard with a stake of 55.6% and the Norwegian company benefits from technology transfer in the passenger ship sector from the Italian company, which is the world’s biggest builder of cruise liners.

The company has produced a portfolio of concept designs of its own as a result of a new strategy introduced at the turn of the year. Until then, Vard had focused on the construction of offshore services vessels, but a sharp fall in the price of oil that led to a virtual stop in orders in tis area forced the company to look for a new direction.

The Ulstein Group has also introduced its own portfolio of expedition cruise ship designs called Ulstein Discovery, said Oyvind Gjerde Kamsvag chief designer at the shipyard, which is located on the west coast of the country.

These range in size from 100 to 165 metres in length and include options for fitting out to various levels of standard, depending on the prospective owner’s preferences and positioning on the market.

The designs also feature X-bow and X-stern, both innovations of Kamsvag, which have been used in offshore services vessels and which have shown to produce superior sea keeping qualities compared to traditional designs. A viewing platform can be build on both sides of the hull of an X-bow vessel to bring passengers closer to the sea level and offer better views, he pointed out.

Kamsvag said that the R&D work at Ulstein also looks at various aspects of the operations of expedition cruise tonnage, such as embarkation and disembarkation of passengers to Zodiacs. This is presently a time consuming and not always an easy part of the operations, yet Zodiac excursions are an elementary part of the expedition cruise product.

You can read more about the developments in the expedition cruise ship segment in the Winter 2016 issue of Cruise Business Review magazine, to be published in November.

Carnival and CSSC signed MOA to build two cruise ships in China

  • Written by Teijo Niemelä

Alan Lam reporting from Tianjin

Carnival Corporation & plc and China State Shipbuilding Corporation (CSSC) today (Friday 23 September) signed an MOA to build two cruise ships in China, with options for two more.

The signing ceremony was conducted during the initial session of this year’s China Cruise Shipping Conference and International Cruise Expo (CCS11) in Tianjin.

Each ship will be about 133,500 gross tons, with a passenger capacity of 5,000, broadly based on Carnival Vista Class design.

Both ships will be targeting the Chinese domestic market, owned and operated by Carnival and its Chinese partners under a new cruise brand yet to be announced.

“We are very proud to be your partner here in China,” said Arnold Donald, CEO of Carnival Corp. & plc. “The best way to predict the future is to create it.”

This MOA is the latest development in a continuous dialogue process that begun three years ago; it is also the first milestone since the formalization of the partnership between Carnival and its Chinese partners in London in October last year in the presence of President Xi Jinping and Prime Minister David Cameron.

The design and building project is a drawn out one, deliberate gradual, as the first unit will not be delivered until 2021/22.

“To build a ship we need to learn from our partners,” said Wu Qiang, General Manager, China State Shipbuilding Corp. “We need to take one step at the time. We must first pay the ‘school fee’ and learn the technology. It will take 5-10 years for us to master the technology because of its complexity.”

The mindset of the Chinese leadership concerning the next stage of China’s cruise industry development is firmly on building its own ships. This is much reflected in CCS11.

Our correspondent is attending this conference and expo. An extensive article on this topic will be published in the November 2016 edition of Cruise Business Review.

MSC Cruises to deploy MSC Splendida to China as of May 2018

  • Written by Teijo Niemelä

MSC Cruises will deploy its MSC Splendida to China as of May 2018. In connection with this, following in the footsteps of the announcement of the opening of the new MSC Cruises own office in Shanghai and a new management and operations team based there, the company is taking another key step to further improve its ability to serve the Chinese home market.

Built in 2009, 137,936 gross ton MSC Splendida will also become one of the largest, most modern cruise ships operating in the region. She features 1,637 cabins, 76% of which come with a balcony and can accommodate a total of 4,363 guests.

In her new positioning, MSC Splendida will join MSC Lirica, which has been serving the Chinese market since May 2016 and has recently moved her homeport to Tianjin, to serve the thriving North China market during the winter season.

Speaking at a press conference in Beijing, Gianni Onorato, MSC Cruises' Chief Executive Officer, commented: "Deploying MSC Splendida to the shores of China is a further testimony of our commitment to this key growth market. In fact, since it came into service MSC Splendida has been the most popular ship for Chinese and other Asian guests cruising the Mediterranean with us."

"MSC Splendida represents a second, strong step towards meeting the growing demand for our unique product and ultra-modern ships by Chinese guests. She will also undergo significant dry-dock enhancement in late 2017, ahead of her deployment, to further improve and customise her already amazing range of services."

MSC Splendida will also introduce the MSC Yacht Club to the Chinese market. This is an exclusive, "ship-within-a-ship" high-end concept that is unique to MSC Cruises and is designed for the most discerning guests who desire exclusivity and privacy. Offering a broad range of private facilities, MSC Yacht Club's guests benefit from exclusive services including a 24-hour personal butler, dedicated concierge reception as well as priority boarding and disembarkation. MSC Splendida will be the only ship to make this high-end offering available to Chinese guests in their home market.

MSC Splendida will visit many popular cruise destinations in China, Japan and Korea. Her itinerary details will be communicated shortly.

TPG and Canada Pension Plan Investment to inject $500 million in Viking Cruises’ parent company MISA

  • Written by Kari Reinikainen

TPG Capital, the San Francisco based private equity firm, and the Canada Pension Plan Investment Board have teamed up to make a $500 million investment in MISA Investments Ltd., the parent company of Viking Cruises, MISA said in a statement.

“Both TPG and CPPIB will make an equal $250 million investment for a combined 17 percent stake. The deal is expected to close in early Q4 2016 pending regulatory approval,” the company said.

The joint investment will help accelerate Viking Cruises’ growth initiatives and strengthen the company’s balance sheet.” The Viking Cruises company consists of two business lines: Viking River Cruises and Viking Ocean Cruises.

Viking Cruises provides travel in 44 countries, currently operating across North America, the United Kingdom, Australia, and will expand to China starting this year.

Tor Hagen, CEO of Los Angeles-based Viking Cruises, says the new partnership and “long-term growth equity capital” will help the target to “grow further, particularly in destination-focused ocean cruising.”

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