Princess Cruises orders a new ship from Fincantieri

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 30 July 2014 30 July 2014

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.

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

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Written by Teijo Niemelä Teijo Niemelä

Category: Top Headlines Top Headlines

Published: 28 July 2014 28 July 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.