Norwegian Cruise Line Holdings Ltd (NCLH), the world’s third largest listed cruise shipping company, has reduced its net loss and reported a small operating profit for the first quarter of 2023.
Net loss narrowed to $159.3 million from $982.7 million a year earlier, while operating result showed a profit of $10.7 million compared to a loss of $688.7 million. Revenues increased to $1,821.9 million from $521.9 million.
The company said it had continued its phased occupancy ramp-up in the first quarter, achieving a 15-point sequential improvement to approximately 101.5%, exceeding guidance of approximately 100%.
“The phased Occupancy ramp-up is expected to be complete in the second quarter at approximately 105%. As planned, this is slightly lower than the second quarter of 2019, reflecting the Company’s strategic shift to longer, more immersive itineraries. Full year 2023 Occupancy, which reflects the phased voyage ramp-up, is expected to average 103.5%, consistent with prior guidance,” NCLH said in a statement.
On the heels of a very strong WAVE season, NCLH continues to experience strong consumer demand. Cumulative booked position for the remainder of 2023 is ahead of 2019 levels inclusive of the company’s approximately 18% increase in capacity, at continued higher pricing.
Advance ticket sales well ahead of 2019
“As of March 31, 2023, the Company’s advance ticket sales balance, including the long-term portion, was a record $3.4 billion, approximately 26% higher than the prior quarter and approximately 60% higher than the first quarter of 2019. Onboard revenue generation remains robust, and the Company continues to focus on increasing its pre-sold revenue from guests prior to voyage sailing, as this typically results in higher overall spend throughout the cruise journey,” NCLH said.
Total revenue per Passenger Cruise Day was up approximately 17.5% as-reported and approximately 18.3% in constant currency in the first quarter of 2023 versus 2019. Looking ahead, full year guidance remains unchanged at Net Per Diem growth in the range of 9.0 to 10.5% and Net Yield growth in the range of 5.0 to 6.5%, both on a constant currency basis and compared to 2019.
Total cruise operating expense increased in 2023 compared to 2022, due to the full resumption of voyages, which resulted in higher payroll, fuel, and direct variable costs of fully operating ships.
Costs for certain items were also impacted by lagging inflationary pressures. Gross Cruise Costs per Capacity Day was approximately $298 in the quarter as-reported and $301 in constant currency.
Adjusted Net Cruise Costs excluding Fuel per Capacity Day in constant currency was approximately $161, reflecting an approximately 14% decrease compared to the second half of 2022 as benefits from the company’s ongoing margin enhancement initiative are taking effect.
Fuel costs, interest expenses minus one- off items increase
Fuel price per metric ton, net of hedges, increased to $779 from $724 in 2022. The Company reported fuel expense of $194.9 million in the period.
Interest expense, net was $171.3 million in 2023 compared to $327.7 million in 2022. The fresh figure included lower extinguishment of debt and debt modification costs, which were $2.4 million in 2023 compared to $188.4 million in 2022. "Excluding this, interest expense increased primarily as a result of higher rates," the company said.
“Other income (expense), net was expense of $(9.0) million in 2023 compared to income of $38.1 million in 2022. In 2023, the expense primarily related to losses on foreign currency remeasurements. In 2022, the income primarily related to gains on fuel swaps not designated as hedges and foreign currency remeasurements,” NCLH said.
The company did not provide a GAAP based guidance for the rest of 2023.
