Norwegian Cruise Line Stock Sinks on Weak Outlook

Corrects story published Nov. 9 to remove reference to any effect on Norwegian Cruise Lines having been generated by the Republican Party in the course of the recent election campaign. Pricing effects on the cruise line came from geopolitical effects, not the GOP.

Norwegian Cruise Line  (NCLH) stock plunged $3.35, or 8.55%, to $35.79 in early Wednesday afternoon trading after the global cruise company predicted that negative effects from geopolitical events would likely lower pricing in 2017. 

Although Norwegian CEO Frank J. Del Rio said in the 2016 third quarter earnings call that the company expects to reel in record 2016 full-year earnings in the range of $3.38 to $3.42 a share, it will face a tougher sales environment in 2017. A year ago, Norwegian said that it expected 2016 full-year earnings to be in the range of $3.35 to $3.45 per share.

Del Rio said the company's bookings will likely remain strong in 2017 but the prices it charges for cruises will drop. He attributed price declines to higher fuel prices and the strengthening U.S. dollar against the pound which took the past year to "materialize."

Taking "geopolitical impacts" into account, 2017 will show "slightly lower pricing," Norwegian CFO Wendy Beck said in its 2016 third quarter earnings call.

Del Rio said details on the company's 2017 outlook will be provided at the end of the fourth quarter.

Before today's market open, Norwegian reported 2016 third quarter adjusted earnings of $1.62 per share, higher than the previous year's third quarter adjusted earnings of $1.35 per share. The company reported third quarter revenue of $1.5 billion, a 15.6% year-over-year increase from $1.3 billion.

Norwegian's 2016 third quarter "record" earnings were driven by the launch of new ships including the Norwegian Escape, taken to sea in October of 2015, Oceania Cruises' Sirena, launched in May, and the Seven Seas Explorer, introduced in July, according to Del Rio.

Del Rio said Norwegian will continue to push sales in emerging markets including Asia and Australia, with a particular bullish approach to China. The company is set to debut the Norwegian Joy in China this summer. The 3,900-passenger ship is described on Norwegian's website as "styled exclusively for Chinese travelers."

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