By Anuja Bharat Mistry
(Reuters) -Norwegian Cruise Line Holdings missed estimates for first-quarter revenue and profit on Wednesday and warned of weak consumer spending on premium voyages due to growing concerns over a possible recession, sending its shares down 9%.
The cruise operator said it was expecting annual net yield – profit made per passenger after costs – below the prior range and softness in booking trends due to macroeconomic uncertainty.
“We are seeing consumers just get a little bit tighter in terms of their willingness to take a longer haul vacation, i.e Europe at this stage versus closer to home where we’re seeing continued strong demand,” CFO Mark Kempa told Reuters.
Consumer sentiment in the U.S. fell for a fourth consecutive month in April, signaling that sustained worries over the economy were prompting Americans from splurging on vacations and pleasure trips.
The cruise operator, which has been working on cost-savings measures such as streamlining its supply chain, also saw pressure from increased investments related to ship maintenance, more dry dock days and new fleet expansions.
On a constant currency basis, annual net yield is expected to increase between 2.0% and 3.0%, compared with its previous forecast of 3.0%.
Norwegian Cruise maintained its annual profit forecast of $2.05 per share and said bookings for the 12-month period were softening but remained within the optimal range.
“Norwegian Cruise Line itineraries skew toward luxury, so the softening could suggest less spending among higher income consumers, contrary to what we heard from other travel and leisure peers,” CFRA Research analyst Alex Fasciano said.
In contrast, peer Royal Caribbean raised its annual profit forecast on robust bookings and lower fuel costs during its latest quarterly earnings.
Norwegian Cruise’s quarterly revenue declined 3% to $2.13 billion from a year earlier. Analysts estimated $2.15 billion, as per data compiled by LSEG.
It reported adjusted profit of 7 cents per share, below estimates of 9 cents.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Krishna Chandra Eluri and Anil D’Silva)
