Norwegian Cruise cuts 2023 profit target on higher costs, Israel war
11:35 am Wednesday, November 01st, 2023
By Granth Vanaik and Doyinsola Oladipo
(Reuters) -Norwegian Cruise Line Holdings on Wednesday warned of a hit to its annual profit from elevated costs and booking disruptions due to the escalating Israel-Hamas conflict and a lingering impact of the wildfires in Maui.
A post-pandemic uptick in demand for cruises was overshadowed by higher food and labor expenses, hurting the cruise operator that now also faces challenges from the ongoing military conflict in the Middle East.
The company cut its full-year adjusted profit forecast to 73 cents per share from 80 cents, while peer Royal Caribbean Group has also warned of an impact to its annual profit from the war.
“We are prudently moderating short-term expectations and keeping a close eye on rapidly evolving global macroeconomic and geopolitical events,” Norwegian Cruise Line Holdings CEO Harry Sommer said.
The company said it had redirected and cancelled all trips to Israel and to the surrounding region for the remainder of 2023. Meanwhile, its unit, Oceania Cruises was making changes to its 2024 itineraries and cancelling stops in Israel.
Norwegian Cruise was seeing a rise in cancellations and a slowdown in bookings to the region, primarily in short-term reservations, Sommer said.
The Israel conflict, coupled with a slowdown in bookings to Hawaii as a result of the Maui fires in August, has impacted its fourth-quarter occupancy levels and led Norwegian Cruise to downgrade its full-year occupancy expectations.
“While investor expectations were for these areas to hit fourth quarter earnings, the hit is worse than expected,” said Truist Securities analyst Patrick Scholes in a note.
Norwegian Cruise expects a fourth-quarter adjusted loss of 15 cents per share, compared with LSEG estimates to break even.
Its shares fell 2% in morning trade.
The company’s third-quarter revenue of $2.54 billion narrowly beat analysts’ expectations, and adjusted profit of 76 cents topped expectations.
(Reporting by Granth Vanaik in Bengaluru and Doyinsola Oladipo in New York; Editing by Shinjini Ganguli)
