The fourth quarter of 2013 brought good news to Norwegian Cruise Line after a bumpy year for the cruise industry.
In financial results released Tuesday, the Doral-based cruise operator said revenues and profits were up for the quarter even as costs also increased.
Quarterly revenues were up more than 19 percent to just over $600 million, while profits jumped from about $1 million to more than $36 million. Adjusted net cruise costs for the quarter, excluding fuel, increased 7.6 percent due to a routine dry-dock maintenance and other scheduled maintenance and repairs.
For the full year, revenues were up to approximately $2.6 billion in 2013 from about $2.3 billion in 2012. Profits were down, however, to just under $102 million from $168 million in 2012. The company said adjusted net income was nearly $296 million; that excludes prepayment and refinancing of credit facilities and the redemption of some senior notes in connection with the company’s early 2013 initial public offering and refinancing activities.
Costs for all of 2013 increased 3.6 percent, while yields, or revenue per capacity day, increased 4.3 percent. Yields are expected to be up 4 percent in 2014.
“I’d be remiss to say that 2013 wasn’t without its challenges,” said Norwegian Cruise Line President and CEO Kevin Sheehan. “The industry faced several incidents throughout the year, the impact of which we are still feeling today. The environment has remained in a promotional state, but it’s a state to which we have become accustomed.”
In February 2013, competitor Carnival Cruise Lines drew widespread criticism — and media attention — for its handling of a disabling ship fire on the Carnival Triumph. Royal Caribbean International, another competitor, suffered a less severe fire in late May.
The headlines for Norwegian were mostly focused around new ships coming to the fleet. The cruise line introduced Norwegian Breakaway, which accommodates about 4,000 passengers, in New York City in May; sister ship Norwegian Getaway debuted in Miami earlier this month.
Sheehan said the New York ship is meeting expectations, but said “it’s a little early to say” how the Getaway will perform in the crowded Caribbean.
“It’s just been a little bit, to be honest, more complicated with the environment that we have,” he said. “As you know, there’s a lot of capacity in Miami.”
Investors seemed spooked by what they heard, sending shares of Norwegian down 4.58 percent at the end of the day to close at $33.56.
But Sheehan said during the call that the traditionally busy booking period in the beginning of the year known as the “wave season” appears to be getting stronger.
“I think we’re starting to feel that things are settling a bit and starting to see a little bit of a glimmer of hope and positive signs in the industry,” he said. “We’re feeling a little bit better about the wave as we get through each week now.”
Wells Fargo analyst Timothy Conder said in a note to investors that he expects pricing in the Caribbean to stabilize for Carnival — which recently launched an advertising campaign to coincide with the Winter Olympics — in the second half of the year. He believes that will help competitors such as Norwegian.
“We feel that the significant advertising by the Carnival brand is benefiting the industry as much/more than Carnival,” he wrote.