Norwegian Cruise Line Holdings has revised profit forecasts for 2017 in the face of “challenging” market conditions.
Second quarter net income fell year-on-year to $145.2 million from $158.5 million despite a 9.3% rise in revenues to $1.2 billion for the parent company of Norwegian Cruise Line, Oceana Cruises and Regent Seven Seas Cruises.
Successive geopolitical events dampened North American consumer demand primarily for Mediterranean itineraries in the three months to June 30, according to president and chief executive Frank Del Rio.
“It was a challenging booking environment where we remained mindful of our go to market strategy to minimise discounting and maintain our hard-fought pricing gains, resulting in lower occupancy, which in turn lowered onboard revenue and overall net yield growth compared to our expectations earlier in the year,” he said.
“Although we experienced significant booking headwinds we delivered earnings consistent with expectations.”
Looking forward, Del Rio added: “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.
“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% to 25%.”
However, as a result of its revised expectations, the company said it no longer expects to achieve its previously stated target of $5 adjusted EPS [earnings per share] in 2017.
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