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Norwegian Cruise's Rocky Forecast After Revenue Beat Hits Shares

By Dave Simpson
Norwegian Cruise's Rocky Forecast After Revenue Beat Hits Shares

Norwegian Cruise Line Holdings Ltd forecast for its first annual profit in three years fell short of estimates on Tuesday 28 February, as the cruise operator feels the squeeze from soaring fuel and labour costs.

Details

Shares fell about 6% in early trading on Tuesday 28 February after the company's bigger-than-expected first-quarter loss estimate.

Norwegian Cruise and rival cruise operators such as Carnival Corp and Royal Caribbean Group are battling rising interest rates, a stronger dollar and soaring food as well as fuel prices due to the conflict in Ukraine.

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Miami, Florida-based Norwegian Cruise forecast an adjusted profit of 70 cents per share for 2023, compared with estimates of $1.06, according to IBES data from Refinitiv.

Norwegian expects a loss of 45 cents per share for the first quarter, compared with estimates for a loss of 33 cents.

Earnings guidance came in a bit soft and though it is early in 2023, there are still doubts on how the macro environment would shape, M Science analyst Michael Erstad said.

The forecast cast a shadow on a better-than-expected fourth-quarter, as the company benefited from its focus on affluent passengers higher occupancy rates.

On-board and other revenue rose to $507.6 million and accounted for about 33% of total revenue as easing of on-board COVID-19 protocols fueled strong spending on casinos and spas.

Norwegian said demand during the all-important period "wave season" has been very strong and booking volumes have accelerated in recent months, echoing Royal Caribbean's comments from early in February.

The "wave season" is the period during January-March when cruise operators offer special deals and discounts for the year.

Occupancy Expecation

Norwegian, which owns the Oceania Cruises brand, expects occupancy to average about 100% for the first quarter and is on track to reach historical levels for the second quarter.

Read More: Norwegian Cruise Bets On Rich Americans To Navigate Downturn

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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