Published Aug 01, 2023 07:35AM ET Updated Aug 01, 2023 08:16AM ET
© Reuters. The Norwegian Pearl cruise ship is seen docked at Miami port, after Norwegian Cruise Line Holdings Ltd cancelled sailings amid rising fears of Omicron-related coronavirus infections, in Miami, Florida, U.S. January 5, 2022. REUTERS/Marco Bello/File photo
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(Reuters) -Norwegian Cruise Line forecast third-quarter profit below estimates on Tuesday as higher costs offset its gains from pent-up demand for leisure travel and raised ticket prices, sending its shares down about 10% before the bell.
Cruise operators have been wrestling with higher borrowing costs as well as elevated costs associated with food, raw materials, fuel, a stronger U.S. dollar and labor due to the pandemic, which are now exacerbated by the Russia-Ukraine war.
Despite undertaking price hikes, higher costs and spiraling marketing expenses have eroded the benefits of a recent resurgence in demand from affluent customers.
Norwegian’s total cruise operating expenses were up 29% at $1.38 billion in the quarter ended June 30.
Rival Carnival (NYSE: ) has forecast third-quarter profit below estimates, signalling that rising marketing and labor costs were eating into its gains from higher ticket prices and steady demand.
Shares of rival Carnival and Royal Caribbean (NYSE: ) Cruises were down about 3.1% and 2.1%, respectively, following Norwegian’s results.
Norwegian Cruise expects third-quarter adjusted profit of 70 cents per share, compared with analysts’ average estimate of 79 cents, according to data from Refinitiv.
However, the cruise operator expects full-year adjusted profit of 80 cents per share, compared with its earlier forecast of 75 cents.
Norwegian Cruise projects third-quarter profit below estimates as costs bite
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