Norwegian's Q1 Revenue Miss Overshadows Raised Outlook

Shares of Norwegian Cruise Line Holdings fell more than 12% after the operator's downbeat first-quarter revenue overshadowed a raise in annual profit forecast on Wednesday.

Expectations for cruise operators have generally become high after strong booking trends and demand drove up their results and shares last year.

Shares of Norwegian and its rival Carnival have seen their growth temper from those highs, in part due to concerns around cost pressures and their brands' exposure to the Middle East conflict.

Meanwhile, peer Royal Caribbean Group's shares have seen 5% growth this year, as it hiked its profit outlook twice since February on the back of booming demand and higher ticket prices.

"The challenge for NCLH shares this year and likely today as well is that RCL has set a very high bar with several massive beat & raises this year," said Truist Securities analyst Patrick Scholes.

Norwegian's quarterly revenue increased to $2.19 billion, but missed expectations of $2.24 billion, according to LSEG data.

Its passenger ticket revenues came in at $1.46 billion for the quarter, compared to expectations of $1.55 billion.

Lingering costs of labor, fuel and raw materials drove cruise operating expenses about 8.4% higher. Norwegian also faces rising expenses from dry dock days, or the time ships spend under maintenance.

Yet, CEO Harry Somer said on a post-earnings call that demand remained strong for cruise vacations, noting a record book position for the next 12 months.

To cater to the growing demand, Norwegian last month said it had placed an order for eight new ships across its three brands, which are scheduled for delivery between 2026 and 2036.

It earned an adjusted profit of 16 cents per share in the quarter, beating estimates of 11 cents per share.

Norwegian expects an adjusted profit of $1.32 per share for the full year, compared with a previous forecast of $1.23 per share.

(Reuters - Reporting by Granth Vanaik; Editing by Milla Nissi)