NCL Corp’s latest financial results reflects challenges it faces
NCL’s net loss widened to $60.8m (£30.7m) in Q107 from $28.8m in the corresponding period of last year, on revenues 15% ahead at $490.8m (£248.1m). Total operating expenses increased by 18.6% to $502.6m (£254.1m), resulting in a first quarter operating loss of $11.8m (£6m), against $2.9m last time.
This year’s result included non-cash foreign exchange translation losses of $9.2m, versus $5.1m in Q106, reflecting the weakening of the US dollar versus the euro.
The company’s cruise lines, which include premium brand Orient Lines, inter-island Hawaii operator NCL America and worldwide operator Norwegian Cruise Line, carried a total of 307,211 passengers during the quarter, 27.2% more than in Q106. Passenger cruise days rose by 21.5% on capacity days 23.4% ahead, resulting in a 1.6 percentage point drop in occupancy to 103.9%.
Gross yields declined by 6.7% to $209.96 and net yields by 5.3% to $148.99. However, gross cruise costs per capacity day were reduced by 4.6% to $199.87 and net costs on the same basis by 1.9% to $141.57.
NCL said the reduction was primarily attributable to economies of scale achieved in marketing, general and administrative expenses from increased capacity, together with lower payroll and fuel costs, partially offset by an increase in dry-docking expenses. During the quarter, average fuel prices including hedging dropped by 3.3% to $333 per metric tonne.
The company announced last month it was withdrawing NCL America’s Pride of Hawaii from the Hawaii market in February 2008, in a bid to stem losses resulting from capacity-related pricing pressure in the market. The ship will be reflagged and renamed Norwegian Jade and operate in Europe in summer 2008 to help NCL capitalise on the growing demand for European cruises.
“We have previously announced several measure designed to improve the pricing of NCL America’s product, further improve its product delivery and reduce crew turnover,” said NCL Corp president and chief executive, Colin Veitch. “Our first quarter results reflect the challenges we have faced in Hawaii and that we will continue to face for the majority of the year.
“However, despite the challenging operating environment and the impact on pricing of sharply increased capacity in Hawaii, we remain committed to the Hawaiian market and believe that the various measure announced since the fourth quarter of last year will collectively result in a significant improvement by the same time next year.”
Miami-based NCL Corp currently has a fleet of 14 ships in service and under construction, including the Norwegian Gem, which is slated for delivery in October 07.
Report by Chitra Mogul
Chitra Mogul
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