Norwegian reports strong final quarter, rise in costs hits full year

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 18 February 2014 18 February 2014

Norwegian Cruise Line, the listed company that is the world’s third largest cruise shipping group, has reported a sharp increase in final quarter net profit, but the figure for the full year fell due to rise in costs

Norwegian’s final quarter 2013 net profit rose to $36.0 million from just $1.0 million in the same period a year earlier, when financial items reduced the bottom line. Revenues rose to $600.3 million from$503.1 million.

 Full year 2013 net profit fell to $101.7 million from $168.5 million in the previous year despite a rise in revenues to $2.57 billion from $2.27 billion as cruise operating expenses rose by the region of $200 million to $1.65 billion. Marketing expenses and depreciations increased as well. Full year net yields rose 4.3%, while the final quarter figure came higher, at 4.8%.

"A year that began with a highly successful initial public offering, followed by other transactions which resulted in a strong balance sheet and credit metrics, and the launch of the first ship in our Breakaway class, Norwegian Breakaway, will undoubtedly be remembered as one of the seminal years in Norwegian’s 47-year history,” said Kevin Sheehan, president and chief executive officer. 

“The hard work of 25,000 Norwegian team members, all with a keen focus on our vision and mission, has been the catalyst for reaching these milestones, reporting solid financial performance in a challenging year for the industry and positioning the Company for measured, disciplined growth,” continued Sheehan.

 

Cruise Business Commentary – Why Discovery impairment could be significant

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 17 February 2014 17 February 2014

Last week, All Leisure group in the UK that owns three niche cruise brands and four ships, said it would book an £6.7 million impairment charge against the 1972 built cruise ship Discovery.

“The market value of mature cruise ships has reduced significantly in the last 12 months and it has been decided that the loss-making mv Discovery will be disposed of at the end of this summer,” All Leisure said in a trading statement issued prior to the release of its 2013 results, which is due on 24 February.

What makes the statement of importance is that despite the fact that several first generation cruise ships, such as Discovery, have been sold for scrap in recent times, many remain in service.

Fred. Olsen Cruise Lines, another UK company, has two units of the long since defunct Royal Viking Line’s 1972-73 original trio, while Phoenix Seereisen in Germany operates the third ship, on charter. Other German and also British tour operators employ several further mature ships.

Another question is that what exactly does the term refer to? If it means ships beyond the age of 30 years, the period in which the asset is expected to be depreciated when ordered, then it also applies to several second generation ships built in the 1980s.

Indeed, in not too distant future, it will also embrace the third generation ships of the late 1980s and early 1990s, much bigger at some 70,000 gross tons or so than the second generation ships of about 40,000 gross tons .

It is interesting to note that excluding intra-group transfers by Carnival and Royal Caribbean, not a single third generation ship has changed hands as yet.

It lies very much in the interest of the cruise shipping industry’s leading players that no such transaction will take at low values: should this happen, then the valuation of similar vessels in the fleets of these companies would probably have to be reviewed as a result.