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Star Cruises 3rd Quarter Earnings!



 
 
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Old November 13th, 2003, 03:05 PM
Ray Goldenberg
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Default Star Cruises 3rd Quarter Earnings!

Hi Everyone,

I received this press release from Star Cruises (parent of NCL &
Orient) and thought it would be of interest. If you have missed any
of my news' postings, they are available on my web site.

Best regards,
Ray
LIGHTHOUSE TRAVEL
800-719-9917 or 805-566-3905
http://www.lighthousetravel.com


November 13, 2003
FOR IMMEDIATE RELEASE INTERNATIONAL

STAR CRUISES GROUP ANNOUNCES EARNINGS FOR THIRD QUARTER AND FIRST NINE
MONTHS OF 2003

Key points for the quarter and in comparison with third quarter of
2002: -

" Capacity increased marginally from 2,133,505 to 2,168,005
capacity days

" Revenue decreased from US$447.4 million to US$437.5 million

" EBITDA was US$117.5 million, down from US$120.6 million

" Operating income increased slightly from US$80.8 million to
US$81.1 million

" Net income increased by 4.3% from US$56.2 million to US$58.6
million

" Net yield was down by 3.4%

" Ship Operating Expenses per capacity day were down by 0.4%

" Selling, General and Administrative Expenses ("SG&A") per
capacity day were down by 9.9%

Key points for the first nine months and in comparison with first nine
months of 2002: -

" Capacity increased by 5.1% from 6,323,797 to 6,643,851
capacity days

" Revenue increased by 1.1% from US$1,205.2 million to
US$1,218.2 million

" EBITDA was US$230.7 million, down from US$291.8 million

" Operating income was US$101.8 million, down from US$171.5
million

" Net income was US$27.4 million, down from US$92.0 million

" Net yield was down by 5.3%

" Ship Operating Expenses per capacity day were up by 6.0%

" SG&A expenses per capacity day were down by 2.0%

" Net yield represents net revenue per capacity day after
deducting such costs as commissions, air ticket costs and other direct
costs.
" Ship operating expenses represent operating expenses excluding
such costs as commissions, air ticket costs and other direct costs.
" EBITDA represents earnings before interest, taxation,
depreciation and amortization.

Star Cruises Group

For the third quarter ended September 30, 2003, Star Cruises Group
(the "Group") recorded a net income of US$58.6 million as compared
with a net income of US$56.2 million for the quarter ended September
30, 2002. Included in the third quarter results this year was a
US$9.2 million in proceeds from the loss-of-hire coverage net of
related expenses arising from the s/s Norway boiler accident.

The Group's revenue for the quarter ended September 30, 2003 was 2.2%
lower compared with the same quarter in 2002. Despite a slight
capacity increase, revenue was lower primarily due to lower cruise
ticket prices and overall occupancy level. As a result, net yield
decreased 3.4% from the third quarter of 2002. The lower net yield and
occupancy level were mainly the result of the tail-end effect of
Severe Acute Respiratory Syndrome ("SARS") on the Asia-Pacific
business. The capacity increase of 1.6% was primarily due to the
introduction of Norwegian Dawn, which was substantially offset by the
non-operation of s/s Norway following its incident in May 2003.

During the third quarter of 2003, total ship operating and SG&A
expenses per capacity day were 3.1% down as compared with the same
period in 2002. This was largely due to further cost reduction
initiatives taken in Asia Pacific during the SARS outbreak period,
partially offset by the costs relating to the new Hawaii operations in
the quarter, expenses of s/s Norway during this quarter and higher
fuel costs. Fuel costs were up by approximately 3.0% on a per
capacity day basis.

Net income for the first nine months of this year was US$27.4 million
as compared to US$92.0 million for the same period last year.
Included in the first nine months results this year was US$5.3 million
of net insurance proceeds related to the s/s Norway boiler accident.
The continuing security alerts, acts of terrorism, the war in Iraq and
the SARS pandemic have all affected negatively the Group's performance
in the first nine months this year. Occupancy was 3.1% lower and net
yield declined 5.3% in the first nine months of this year compared
with the corresponding period last year.

The Group's revenue for the first nine months of this year was
US$1,218.2 million, up 1.1% from US$1,205.2 million in the same period
last year. The increase was principally due to a 5.1% increase in
capacity with the Norwegian Dawn entering service at the end of last
year, substantially offset by the weak passenger demand and the
withdrawal of s/s Norway at the end of May this year.

On a per capacity day basis, total ship operating and SG&A expenses
were 3.7% higher for the nine months ended September 30, 2003 as
compared with the same period last year. The previously disclosed
US$5.3 million costs incurred largely in the second quarter in
response to the SARS outbreak and the higher fuel prices, especially
in the lead-up to the war in Iraq had contributed substantially to the
increase in ship operating and SG&A expenses in the first nine months
of this year. Fuel costs were up by over 21% on a per capacity day
basis which over the first nine months accounted for approximately
US$17 million in negative variance compared to last year's first nine
months results.

On October 17, 2003, the Company announced a US$100 million Rights
Issue offering and a US$180 million Convertible Bonds issue. The
Convertible Bonds issue was completed on October 20, 2003. The Company
intends to use the net proceeds of these fund raising exercises for
the acquisition or construction of vessels, as general working capital
and/or to reduce certain of the Group's outstanding bank loans.


Star Cruises (excluding NCL)

In the third quarter this year, Star Cruises operated with 2.9% higher
capacity as compared with the same quarter in 2002. Occupancy level
and net yield in third quarter were 10.8% and 12.5% lower respectively
as compared with third quarter last year. Net yield weakened as
pricing was used to stimulate demand after the containment of SARS
when both the SuperStar Virgo and SuperStar Leo were relocated back to
their homeport in Singapore and Hong Kong respectively in the latter
half of July this year. On a per capacity day basis, ship operating
and SG&A expenses decreased 10.4% as compared with the same period in
2002 due primarily to the cost reduction exercises taken during the
SARS crisis.

For the first nine months this year, capacity was 1.0% lower as
compared with corresponding period in 2002. Occupancy and net yield
were 11.8% and 14.5% lower respectively as compared with first nine
months of last year.

On a per capacity day basis, Star Cruises incurred 5.1% higher
operating and SG&A expenses in the first nine months this year as
compared with corresponding period last year. The increase was
principally due to higher fuel costs and US$5.3 million of costs
incurred in response to the SARS outbreak. The latter is comprised of
ship relocations costs, expenses relating to streamlining the
operations as well as higher advertising and promotional costs in
promoting the two megaships in Australia during their temporary
deployment there. Fuel costs on a per capacity day basis were 17%
higher for the first nine months this year as compared with first nine
months last year.

After the containment of the SARS outbreak, bookings from the domestic
and inbound Asian markets bounced rapidly back to normal, however, the
inbound Caucasian market from Australia and Europe which presently
make up less than 10% of total passenger load has not fully recovered.

Following from the very positive response during the temporary
deployment of the two megaships in Australia, Star Cruises announced
in late September a regular seasonal deployment of SuperStar Leo to
Australia in 2004 during the peak summer months (January through
March) there. Bookings since have been very encouraging.

NCL Group

The NCL Group had a good third quarter, reflecting a relatively strong
summer season for domestic North American cruising. Available capacity
days were up by 1.1% over third quarter of 2002 reflecting the
introduction of Norwegian Dawn and the counterbalancing absence of s/s
Norway. Occupancy rates were slightly down, at 106.8% versus 107.8%
last year.

Net yield was up 1.6% over third quarter last year. Most domestic
trades performed well from a revenue standpoint. The three
Europe-based ships all experienced a more challenging pricing
environment. Nevertheless, for the NCL Group overall, the net revenue
outcome was encouraging.

Ship operating expenses were higher by 4.2% on a per capacity day
basis. However, excluding fuel and the impact of s/s Norway having no
capacity days available yet still incurring costs, the underlying ship
operating costs were up by only 1.0% on a capacity day basis. SG&A was
up 3.7% per capacity day, partly as a result of s/s Norway's absence
and partly reflecting costs associated with the start up of the
Hawaii-based US flag operations.

Offsetting some of the negative impact of s/s Norway's absence on net
revenue and operating costs, non-recurring income of US$9.2 million
was recorded in the quarter, being the balance of the loss-of-hire
coverage received following the s/s Norway accident.

EBITDA per capacity day was up 7.8% on third quarter last year, with a
total EBITDA in third quarter 2003 of US$91.9 million being reported
versus US$84.3 million last year. Operating income rose to US$64.6
million from US$61.4 million last year; an increase of 4.1% per
capacity day.

For the nine months ended September 30, 2003, the NCL Group recorded a
7.7% capacity increase and virtually unchanged occupancy: 104.3%
versus 104.4% last year. Net yield was down 0.2%. Ship operating costs
were up 6.8% on a capacity day basis; up 4.1% excluding fuel; and up
1.5% excluding fuel and the s/s Norway effect.

SG&A was up 0.3% over last year on a capacity day basis.

EBITDA declined to US$168.4 million versus US$172.2 million last year,
and operating income declined to US$88.9 million from US$104.4 million
last year. Both year over year reductions are the result of the
difficult trading conditions in the first half of the year.

Norwegian Dawn has completed her first summer in New York and is now
moving into her first winter deployment there. The summer has been
very successful and we are confident that the winter deployment will
turn out to be a strong business too. It is likely, though, that the
first winter will be a time of proving to the market that the
deployment works operationally. The Hawaii business continues to
perform well and forward bookings on next summer's introduction of
Pride of America are already very encouraging.

Crown Odyssey has now rejoined the NCL fleet as Norwegian Crown and is
currently sailing to her winter deployment in South America. Orient
Lines, therefore, is back to being a one-ship brand: Marco Polo.

During the quarter, two additional ships for the NCL brand were
ordered at Meyer Werft in Germany for delivery in the fall of 2005 and
the spring of 2006. These two ships are variations on the Norwegian
Dawn/Norwegian Star design that is proving so successful and popular.



ABOUT STAR CRUISES GROUP
Star Cruises, the third largest cruise line in the world is a global
cruise brand presently operating a combined fleet of 19 ships with
over 24,000 lower berths, with cruises to destinations and islands in
Asia-Pacific, North and South America, Hawaii, Caribbean, Alaska,
Europe, Mediterranean, Bermuda and the Antarctica under the Star
Cruises, Norwegian Cruise Line, Orient Lines & Cruise Ferries brands.

The Pride of America - the first of the two Project America vessels -
is presently under completion at the Lloyd Werft shipyard in Germany.
The 81,000-grt and 2,100 lower berth vessel is expected to commence
Hawaii inter-island cruising next year with a "Best of America" theme.
The second Project America vessel, which is currently sailing as
Norwegian Sky will be renamed Pride of Aloha and will reflect a strong
Hawaiian theme which will be accomplished after a refurbishment in
September 2004. Both ships will sail under NCL's new US-flag brand -
NCL America (sm).



Star Cruises is represented in more than 20 locations worldwide with
offices in Australia, New Zealand, China, Germany, Hong Kong, India,
Indonesia, Japan, Korea, Malaysia, Norway, Philippines, Singapore,
Sweden, Switzerland, Taiwan, Thailand, United Kingdom and the United
States of America. For more information on Star Cruises and NCL,
please visit www.starcruises.com and www.ncl.com

For investor relations and editorial, please contact:
MALAYSIA

Gerard Lim Jane Poh
Senior Vice President, Vice President,
Chief Executive Office Corporate
Communications
Kuala Lumpur, Malaysia Port Klang, Malaysia
Tel : (603) 2030 6013 Tel :
(603) 3109 2526
Fax : (603) 2161 3621 Fax :
(603) 3101 1479
Email : Email :



- end -

Forward-looking statements
This press release contains forward-looking statements that involve
risks and uncertainties. These forward-looking statements are not
historical facts, but rather are based on the current beliefs,
assumptions, expectations, estimates and projections of the directors
and management of Star Cruises Limited (the "Company") about the
industry and markets in which the Company and its subsidiaries (the
"Group") operate. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other factors,
some of which are beyond the control of the Group, are difficult to
predict and could cause actual result to differ materially from those
express or forecast in the forward-looking statements. Factors that
could cause actual result to differ materially from those reflected in
the forward-looking statements include general economic and business
conditions, changes in cruise industry competition, weather and other
factors. Reliance should not be placed on these forward-looking
statements, which reflect the view of the Company's directors and
management as of the date of this press release only. The Company
undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the
release.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND
2002
PREPARED IN ACCORDANCE WITH US GAAP
(unaudited, in thousands of US dollars, except per share and operating
data)

Third Quarter Nine Months
ended September 30, ended September 30,
2003 2002 2003 2002


Revenues $ 437,518 $ 447,373
$1,218,176 $1,205,171

Costs and expenses

Operating expenses (262,742) (264,266)
(804,530) (735,673)
Selling, general and administrative
expenses (57,307)
(62,555) (182,949)
(177,716)
Depreciation and amortization (45,621)
(39,771) (134,236) (117,306)
Other income (expenses) 9,229 -
5,297 (2,931)


Total costs and expenses (356,441)
(366,592) (1,116,418) (1,033,626)


Operating income 81,077 80,781
101,758 171,545


Non-operating income (expense)

Interest income 388 1,266 2,054
2,264
Interest expense, net of capitalized
interest (21,349)
(24,289) (68,987)
(72,044)
Income tax expense (568) (600)
(1,261) (1,135)
Other expense, net (966) (993)
(6,143) (8,604)


Total non-operating expense (22,495)
(24,616) (74,337) (79,519)


Net income $ 58,582 $ 56,165
$ 27,421 $ 92,026



Earnings per share in US cents after
adjusting for the effect of rights issue in
December 2002:
- Basic 1.18 1.25 0.55
2.11
- Diluted 1.18 1.25 0.55
2.10

Weighted average common stock
outstanding after adjusting for the effect of
rights issue in December 2002 ('000)

4,946,489

4,487,267

4,946,279

4,370,370

Weighted average common stock
outstanding and assuming dilution and after adjusting for the effect
of rights issue in December 2002 ('000)


4,950,712


4,499,279


4,946,477


4,383,281

Operating data
Passenger Cruise Days 2,176,090 2,225,359
6,358,900 6,248,438
Capacity Days 2,168,005 2,133,505
6,643,851 6,323,797
Occupancy as a percentage of capacity days 100%
104% 96% 99%



Reconciliation of results prepared under US GAAP to HK GAAP

For information on the Group's HK GAAP announcement, kindly visit the
Group's website at
www.starcruises.com. The following reconciles the
Group's results prepared under US GAAP to HK GAAP.



(unaudited, in thousands of US dollars) Third Quarter
ended September 30, Nine Months
ended September 30,
2003 2002 2003 2002

Net income under US GAAP $ 58,582 $ 56,165
$ 27,421 $ 92,026

HK GAAP adjustments:

Interest capitalization (1,345) (733) (1,345)
(2,199)
Forward contract gain (loss) (1,281) 4,384
1,469 1,624
Amortization of intangible assets (3,924)
(4,101) (11,773) (12,304)
Others, net (421) (78) (1,268) (544)


Net profit under HK GAAP $ 51,611 $ 55,637
$ 14,504 $ 78,603



 




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