|The addition of Norwegian Escape (pictured) to the fleet contributed to higher earnings.|
Norwegian Cruise Line Holdings (NCLH), the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, has revised its earning expectations downward, citing the impact of the recent Brexit vote and weak pound, as well as lower demand from North American cruise travelers.
“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 NCLH President and CEO Frank Del Rio. “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 percent to 25 percent.”
According to Bloomberg News, NCLH stocks fell on the announcement by as much as 7.9 percent. Shares in Carnival Corp. and Royal Caribbean Cruises Ltd. also declined.
The news came as part of the company’s second quarter earnings report. According to the report, total revenue was still up 9.3 percent year over year, to $1.2 billion. Net income was $145.2 million compared to $158.5 million in the prior year which included a benefit of $34.3 million as a result of a fair value adjustment related to the acquisition of Prestige Cruises International, which included the Oceania and Regent brands. This quarter NCLH generated Adjusted Net Income of $192.6 million compared to $171.6 million last year.
Adjusted Net Revenue in the period increased 10.3 percent to $917.8 million compared to $832.4 million in 2015. These increases were primarily attributed to the addition of Norwegian Escape and Oceania Cruises' Sirena to the fleet as well as improved pricing, slightly offset by four scheduled dry docks in the period.
Fuel prices net of hedges fell 15.9 percent. NCLH reported a fuel expense of $80.6 million, as well as a lost of $3.2 million related to the ineffective portion of its fuel hedge portfolio due to market volatility.
Other updates include the launch of the new Seven Seas Explorer in June. You can see our firsthand tour of the ship here.
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