Heightened passenger demand for cruises has led Malaysia’s Genting Hong Kong to cut its expected loss in the first half of 2018.
The owner of Star Cruises, Crystal Cruises and Dream Cruises says consolidated net loss up to June 30 is now forecast to be in the range of $150m to $170m.
This compares with a loss of $205.4m, excluding the results of Travellers, in the corresponding period of last year.
Genting attributes the improvement to strength in its core cruise segment.
Genting’s optimism compares with cautious guidance last month from industry giant Carnival Corp, which indicated that third-quarter yields could improve less than 3% compared with a year earlier.
The Arnold Donald-led group lowered it EPS guidance for the year to $4.15 to $4.25 from $4.20 to $4.40, below analysts’ predictions of $4.39.
It pointed to fuel and currency exchange costs.Markets reacted with a sharp drop in Carnival’s share price from which it still has to recover.
Nevertheless, Miami-based Carnival still posted at the time an adjusted profit of $489m for the second quarter, up from adjusted net income of $378m.
Genting already has succeeded in halving its net deficit in the second half of last year to $244.28m from $504.23m in the corresponding period of 2016.
But that was down to one-off $205m profit from selling some of its stake in Norwegian Cruise Line and absence of a 2016 impairment loss totalling $305m on ordinary shares in NCL.
It had earlier also been suffering start-up losses from Dream Cruises’ 150,700 gt World Dream in Hong Kong
Rising fleet capacity has helped fire up Genting and should continue to do so given the number of ships it has on order for its different brands.
This includes delivery in 2020 for Crystal Yacht Expedition Cruises of the19,800, 200-passenger expedition vessels Crystal Endeavour and Crystal Endeavour 2, costing a reported $200m each.
Cost per berth on the luxury ships at $1m each compares with closer to $200,000 to $300,000 per berth for more mass market vessels.
Also, Dream Cruises has a 204,000-gt, 5,000 passenger newbuilding pencilled in for the fourth quarter of 2021, costing around $1bn.
Crystal Cruises has a 600-passenger Diamond-class ship for delivery in the winter of 2022.It is reportedly costing over $450m.
All of those vessels are being built at MV Werften in eastern Germany.
Genting acquired the shipbuilder to overcome the squeeze on cruiseship yard capacity.The global orderbook for cruiseships now exceeds 100 vessels worth over $60bn.
