NCL stock tanks after poor earnings report

NCL stock has fallen more than 12% today

NCL reported quarterly earnings today and later on in the morning during the earnings call FDR stated that a number of reasons caused NCL to not meet earnings expectations, including weak demand from North American consumers and the weaker British pound as a result of Brexit. He also stated that he does not believe the company will be able to achieve the stated 2017 EPS.

Bargain hunters - time to go shopping?????

Remember - if you own 100 shares of NCLH, you are entitled to OBC, the amount dependent on the length of the cruise.

gnomie :)

I don't understand why Brexit is used as an excuse as this only occurred on June 23rd.

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I don't understand why Brexit is used as an excuse as this only occurred on June 23rd.

 

 

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It seems that Brexit is being used as the scapegoat for everything right now. While it is true that the overall effect will be substantial, it will not happen overnight. We visit quite often and it amazes me that within one week of Brexit, the hotel rates went up more than 25% for stays one year away.

gnomie :)

I agree absolutely. Whilst sterling has dropped in value the stock market is good as many companies earn in dollars ( shell, BP, HSBC etc.. ) As you may have read Regent have sent emails and today a letter to us spelling out the gloom of currency rates but as we have had months of negativity from remainers we shall wait and see. Any UK hotels that have increased rates because of Brexit are just profiteering as our tourist industry is forecasting traveller increases due to the poorer ( for us ) exchange rates. I am sure things will settle down. If we don't cruise Regent we won't cruise at all but my guess is that they will still want our business and will price accordingly.

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It would be interesting to know which of the NCLH lines are not performing as well as expected - or is it all three?

I hope FDR will not try to correct the future figures by excessive cost cutting on the Regent brand - either on-board or on-shore

We have no objection to savings through targeted efficiency measures and cutting out waste but random cost cutting will just devalue the product, putting the Regent experience into a downward spiral

It would be interesting to know which of the NCLH lines are not performing as well as expected - or is it all three?

 

I hope FDR will not try to correct the future figures by excessive cost cutting on the Regent brand - either on-board or on-shore

 

We have no objection to savings through targeted efficiency measures and cutting out waste but random cost cutting will just devalue the product, putting the Regent experience into a downward spiral

Well, let's call it CEO/Corporate Management 101... If you can't increase or make revenue targets then you only have one other option. And that's cut expenses. The Instutional investors and Analysts are brutal on this, there is no forgiveness for a public company.

Why don't we look back at what happened at Renaissance during its downward spiral with respect to cost cutting.

Marc

Why don't we look back at what happened at Renaissance during its downward spiral with respect to cost cutting.

 

Marc

Marc, IMO, this is not a fair comment. what happened to Renaissance firstly had nothing to do with FDR but had to do with significant mistakes when they tried to cut TA's out of commissions in addition to building too many ships too fast (there were so many new ships built that when they went out of business, Princess, Oceania and later Azamara all had old Renaissance ships).

I can certainly understand why Regent, Oceania and NCL may not have met their "marks". There is so much terrorism going on in the Middle East as well as in some parts of the Mediterranean that many travelers are concerned and have cancelled cruises. This is no different than what is happening with other cruise lines.

While it may seem too early for Brexit to have an effect, none of us know how many people from the U.K. have cancelled cruises.

For those of us that were sailing on Regent during the downturn of the economy in the U.S., they did not cut back staff or anything else. Instead, Regent implemented the "included excursions" that was a huge hit with passengers new to Regent (or were thinking about sailing on Regent).

While it may seem that I am just sticking up for NCHL, to be fair, one must ask what the numbers are for Regent's competition? While NCHL has three cruise lines, most of us are interested in Regent. I'm not certain if Crystal, Seabourn or Silversea are "public" companies (think that Seabourn is), did they meet their numbers?

Regent's new ship is selling like crazy (based on availability of all suites in the next 18 months), so they are bound to land on their feet (without cutbacks). As many of you may remember, Regent has been accused of cutbacks for as long as I have been sailing with them (2004). However, there has been no hard evidence of this. I have asked numerous crew members and officers onboard Regent ships for years and it would be strange if all of them were lying about lack of onboard cutbacks. As evidenced by the new menu's currently being debuted on all of the ships, the food costs have obviously increased and the only change in their excellent service is having to hire so many people for their new ship (not really different than hiring for Crystal's new ships or Silversea's upcoming new ship).

On the other hand, there have been decreases with air and hotel credits and possibly increases in excursion costs. These cutbacks do affect the cost of your cruise but have no effect on your onboard experience.

It is easy for us to make negative predictions and perhaps is a bit harder to sit back and wait to see what the future holds. It was no so long ago that Regent customers expected Regent to merge with Oceania or for it to become like NCL. Obviously, none of this things have occurred. In other words, the sky isn't falling - only the stock!

Wasn't alluding to anything negative about FDR; a number of people I have met over the years have convinced me that he is a good businessman.

Why i mentioned Renaissance was that they were the last multi-ship cruise line to go into bankruptcy which coincidentally was after a terrorist attack that curtailed tourism; sort of like situation today. I would think that there have been some case studies at various business schools that have been written about that episode that would be interesting to read.

Marc

PS Seabourn is part of Carnival.

PPS There is room on Seven Seas Explorer next week if you want to get back onboard; lots of room on 4 October cruise if that works better.

Agree that the case studies would be very interesting to read.

Yes - Seabourn is part of Carnival (as is Princess, Hal, Cunard and probably others). Was just assuming that they are a public company and their "numbers" may be out. I know that Silversea is privately owned and believe that Crystal is but am not sure.

We will have to wait until November to get back on the Explorer but will be cruising with you and your friends in March.

Wasn't alluding to anything negative about FDR; a number of people I have met over the years have convinced me that he is a good businessman.

 

Why i mentioned Renaissance was that they were the last multi-ship cruise line to go into bankruptcy which coincidentally was after a terrorist attack that curtailed tourism; sort of like situation today. I would think that there have been some case studies at various business schools that have been written about that episode that would be interesting to read.

 

Marc

 

PS Seabourn is part of Carnival.

 

PPS There is room on Seven Seas Explorer next week if you want to get back onboard; lots of room on 4 October cruise if that works better.

Yes, I think there is excess capacity on some cruises such as Exploer Oct 12 and Montreal to Miami in Oct, both were offered at 1/3 off Regent website prices. Sorry that I can't take advantage of this but maybe someone else can.

................

I can certainly understand why Regent, Oceania and NCL may not have met their "marks". There is so much terrorism going on in the Middle East as well as in some parts of the Mediterranean that many travelers are concerned and have cancelled cruises. This is no different than what is happening with other cruise lines.

 

...........

 

Regent's new ship is selling like crazy (based on availability of all suites in the next 18 months),

 

.....

 

In other words, the sky isn't falling - only the stock!

Booking do not necessarily translate into final payments.

If things on the terrorism continue I see a bleak future. The Black sea, Turkey and other parts of the Eastern med are now gone. The recent attacks in Europe are having a toll as FDR alluded to. Just how much more the traveling public will bear before they put their collective head in the sand and run for cover is getting IMO close to a tipping point. Even the US-Europe flights look like they are getting empty.

In light of all this I guess that it is a good thing that Regent is now part of NCLH, otherwise they my truly go the way of Renaissance.

(I am a NCLH stockholder)

j

As those of us who have been part of corporate management of publicly-held companies are all too well aware, the market (meaning Wall Street) is not at all inclined to take "the long view" of these matters. Rather, the market is unfortunately highly focused on quarterly and annual results. Therefore, NCLH could well be slammed by the market if the 2017 earnings forecasts are not made.

Sadly, cost-cutting is the first avenue of approach to keep overall results from diving. FDR and his team did not have to face the market when Regent was controlled by Apollo and therefore had more flexibility in managing expenses and revenue and did not have to take the "short view".

We will keep our fingers crossed (without much genuine hope, however) that NCLH as a whole and Regent in particular will be able to weather this storm without significant cost cutting.

Yes, definitely fingers crossed. Having lived through one round of cost-cutting by Regent around 2005, I have no desire to experience this again.

If there was cost cutting in 2005, it was under previous ownership (actually, two owners ago). We did not sail in 2005 - we went from 2004 (Paul Gauguin under Regent management) to 2006 and the only issue I remember on the Voyager at that time was what appeared to be stained carpeting that needed to be replaced. The food and service at that time was excellent which is no doubt why we continued sailing on Regent.

Over on the NCL board there is a quite active thread regarding the slumping stock price. People are complaining that since FDR took over, the nickle and diming situation has only become much worse and many items that use to be included are now extra. In the press release following the earnings call, FDR made mention that he wants to do away with discounting.

As many of the analysts have pointed out both yesterday and today - all entities want to rid the market of discounting. However, as with a cruise ship, many of the costs remain the same, no matter how many passengers are on board. By trying to eliminate discounting, he has also alienated many of the NCL core customers who have flocked to other brands, thereby resulting in unsold capacity.

Someone asked about the other cruise companies - right now, the NCL tumble is taking down all the other stocks but when RCL reported their earnings, they beat the market prediction.

As was posted previously, when one is with a publicly traded company, the market determines the future and it is very short sighted. In the last 52 weeks the stock has lost considerable value and so far today has not made any recovery. even though some of the gurus have changed the status from hold to buy.

It will be interesting to see what happens - more than 90% of the NCLH stock is owned by institutional investors and if they start to dump their holdings, it could signify problems ahead.

gnomie :)

According to what I just read "Carnival (CCL -2.9%) and Royal Caribbean (RCL -6.7%) trade lower after Norwegian Cruise Line Holdings reduced its 2016 guidance." According to Travel Industry.

I am wondering who did not expect this? After reading today's articles, in addition to terrorist problems in the Middle East and the Mediterranean, fears of Zika virus is affecting Caribbean cruising (and, although it was not in the articles, I suspect it is affecting cruising to Brazil as well). In terms of Brexit, I suspect that people that can afford luxury cruising will continue to cruise Regent and other luxury lines - pretty much as they did during the downturn of the economy in the U.S.

I followed the NCL board for a few months (after NCHL purchased Regent and Oceania), I stopped reading because, with all due respect, some posters seemed to complain about everything and blamed FDR (even for things that were put into place by his predecessor). While the Regent board can be quite negative, their customers seem to much more in touch with reality (and the current news).

I suspect that this will affect all travel related industries. IMO, it is sad and no one really knows when travel will resume in full force in these areas.

Out of interest, is anyone on the Regent board cancelling cruises due to terrorism, Zika or Brexit? Or, has anyone ceased booking future cruises?

IMO, predicting something that may or may not happen as the result of the lower stock prices in the cruise industry is interesting to talk about but, unless someone has a crystal ball, all we are doing is guessing. And, if history repeats itself, Regent may make some changes but it is likely to not impact the passenger experience on their ships.

Out of interest, is anyone on the Regent board cancelling cruises due to terrorism, Zika or Brexit? Or, has anyone ceased booking future cruises?

On the contrary - our last cruise was completely rerouted due to terror concerns (original debarkation port was Istanbul, changed to Haifa) and we didn't give it a second thought. We had friends tell us we were crazy to go to the Med in light of the current situation, but we never even considered not going.

It was a good choice, too, as the price was cut substantially (enough so that we could afford to bring my in-laws with us) and we both agreed that this was one of our best cruises ever, if not THE best.

We have one more Med cruise booked next April and unless a full scale war breaks out, we plan on going. Our next two booked after that are in different geographic regions, but that's due to wanting a change, not from any fears of bugs, bombs, or Brexits...

On the contrary - our last cruise was completely rerouted due to terror concerns (original debarkation port was Istanbul, changed to Haifa) and we didn't give it a second thought. We had friends tell us we were crazy to go to the Med in light of the current situation, but we never even considered not going.

 

It was a good choice, too, as the price was cut substantially (enough so that we could afford to bring my in-laws with us) and we both agreed that this was one of our best cruises ever, if not THE best.

 

We have one more Med cruise booked next April and unless a full scale war breaks out, we plan on going. Our next two booked after that are in different geographic regions, but that's due to wanting a change, not from any fears of bugs, bombs, or Brexits...

We did a similar cruise out of Istanbul last October and was also told that we were crazy (it was an amazing cruise).

As the dollar gets stronger, more people from the U.S. may well be filling cruise ships that are going to the Euro zone. As long as Regent and the U.S. government feels that it is "safe enough" to visit, we will not change any of our plans (or our next four booked cruises). The reason we are only doing half of your April cruise (the transatlantic half) is, like you, wanting a change - not from any fears.

In 10/2015 we booked BCN/BCN for 5/2017. After following the Europe/Med developments and hoping the west Med would be OK, we cancelled this cruise in 3/2016 and waitlisted for LAX/MIA 1/15/17. Finally cleared ~ 2 weeks ago.

I've been to over 80 countries for business and pleasure, including Saudi Arabia before, during and after Desert Storm. At that time when visiting the Middle East, I'd grow a beard, take along fake suntan lotion to darken my skin and carry $5000 in gold to use in a pinch. My philosophy now is not to tempt fate, even if the risk is small.

Just another view/to each his own!

So, in our case we bailed on the Med for an interesting voyage closer to home.

Out of interest, is anyone on the Regent board cancelling cruises due to terrorism, Zika or Brexit? Or, has anyone ceased booking future cruises?

 

I have 104 days booked on Regent spanning the period March 2017 through February 2018. I have been paying these cruises off as I can as I want to get them all paid off before I retire. March cruise is paid off while I have made a large payment on the next cruise. I have been planning to make a total of $40K in payments between this October and next January. If it appears that NCLH, or even just Regent, is running through cash; I will NOT make those payments. Renaissance cruisers had a tough time getting reimbursed when they went under (FDR gone by that time so not making negative statement) so I don't want to have $70K+ sitting with Regent with no recourse to getting money back.

No plans to cancel due to terrorism; I won't go to Turkey because I don't like the government but not taking anywhere else off the list. Still considering a trip to Pakistan and Afghanistan and Chinese Silk Road if I can convince Arlene. :D

Marc

I have 104 days booked on Regent spanning the period March 2017 through February 2018. I have been paying these cruises off as I can as I want to get them all paid off before I retire. March cruise is paid off while I have made a large payment on the next cruise. I have been planning to make a total of $40K in payments between this October and next January. If it appears that NCLH, or even just Regent, is running through cash; I will NOT make those payments. Renaissance cruisers had a tough time getting reimbursed when they went under (FDR gone by that time so not making negative statement) so I don't want to have $70K+ sitting with Regent with no recourse to getting money back.

 

No plans to cancel due to terrorism; I won't go to Turkey because I don't like the government but not taking anywhere else off the list. Still considering a trip to Pakistan and Afghanistan and Chinese Silk Road if I can convince Arlene. :D

 

Marc

Thank you for your very interesting post. We have our November and March cruises paid off but nothing beyond that. At this point, I have confidence that Regent will get through this okay. My reasoning is: 1) People in the U.S. are not in a financial crisis and have no reason not to book cruises other than the fact that certain areas are of concern and; 2) I "think" (not sure) that one of the management team that held the "Town Hall Meeting" onboard the Explorer alluded to the fact that there will be more Panama Canal itineraries and itineraries that are not near "problem" areas.

We are booked on an Asian itinerary that I expect to sell well - at least in the U.S. market. I haven't seen posts regarding the devalued Euro but, IMO, this may also play a role in less bookings from countries in the "Euro zone".

As mentioned in a previous post, it seems that people that can afford luxury cruises will continue to sail on luxury lines (especially in the U.S. where the dollar is strong at the moment). On the other hand, it seems that many NCL cruisers sail in the Caribbean. Do you think that the threat of Zika will affect these cruisers? I have no opinion on that.

In terms of Oceania, it seems as if their passengers are from all over the place -- some from mainstream cruise lines - others from lower premium and some from luxury lines (people that find Oceania more affordable). For these reasons, it is difficult to tell what they will or will not do.

At the moment, we are not concerned about Regent having the same fate as Renaissance. NCHL is the third largest cruise company in the world and has the ability to weather the storm (so to speak) better than Renaissance did. Again, just my opinion.

Is it correct to assume that you are looking at Pakistan, Afghanistan and Chinese Silk Road as a "land" vacation? If so, hope that you can convince Arlene.

P.S. Saildude16 - also found your post interesting - especially the part of having "gold" with you. I bet that no one else on Cruise Critic has considered that:-)

 

P.S. Saildude16 - also found your post interesting - especially the part of having "gold" with you. I bet that no one else on Cruise Critic has considered that:-)

I found it interesting!! In the late 70's my husband and I were expats in Saudi. We always carried at least a thousand dollars in cash (the gold was on my wrists ;-) ) for possible emergencies/problems. Fascinating and terrific experience.

And to paraphrase UUNetBill.....bugs and bombs don't frighten me either.

And...good luck Marc with Arlene!!

Since the beginning of 2016 the stock price of the three major cruise corporations has moved as follows:

CCL (includes Seabourn): -6.10%

RCL (includes Azamara): -30.05%

NCLH (includes Regent): -34.40%

Since Brexit (23 June):

CCL: +4.95%

RCL: -6.99%

NCLH: -13.11%

Since the beginning of 2016 the stock price of the three major cruise corporations has moved as follows:

 

CCL (includes Seabourn): -6.10%

RCL (includes Azamara): -30.05%

NCLH (includes Regent): -34.40%

 

 

Since Brexit (23 June):

 

CCL: +4.95%

RCL: -6.99%

NCLH: -13.11%

Do you also have numbers of the percentage of passengers on CCL and RCL cruise lines that are from the U.K.? It would be good to have those numbers to compare. My guess is that, with the exception of Seabourn, Regent and perhaps Azamara, the percentage would be low. Perhaps I am naïve but I imagine that the number of U.K. cruisers on Carnival (not counting Seabourn) would be quite low which could equate to less of an effect. The most interesting number, which likely is not available, would be whether or not Brexit is affecting Seabourn as Seabourn appears to have many passengers from the U.K. (based solely on posters on Cruise Critic). My point is that Brexis should only affect cruise lines that have a higher number of people from the U.K. booking cruises. IMO, the main reason for the lower stocks is terrorism and lack of itineraries that are interesting to passengers while being relatively safe.

As I posted on the Brexit thread, based on Regent's history of reacting to downturns in the economy, there will likely be no cut-backs but instead Regent will find ways to encourage passengers to book. Also, IMO, the stock market reacts to things differently than people do (as evidenced by the stock marketing going down quite a bit in reaction to Brexit only to return to the pre-Brexit levels a week later). I suspect that travel, in general, will be affected by recent terrorism in Europe. On the plus side, the U.S. dollar is doing well and the Euro is down which makes the "Euro Zone" a good place to visit for U.S. residents. The key to is learn which ports cruisers want to visit and are not afraid of.