(Bloomberg) -- Norwegian Cruise Line Holdings Ltd. signaled strong cruise demand is expected to continue this year, though its initial profit outlook missed expectations on higher costs.
Earnings will be about $2.05 a share this year, the company said in a statement Thursday, lower than the average analyst projection of $2.09 a share. Foreign exchange and fuel costs are expected to be $70 million higher than previously expected.
The Miami-based firm’s shares fell by as much as 7.9% following the announcement before paring losses. Peers Royal Caribbean Cruises Ltd. and Carnival Corp. were little changed.
Norwegian said it remains “at its optimal booked position” for the next year as it continues to see “strong consumer demand for its offerings across itineraries and brands throughout 2025 and into 2026.”
While earnings projections for the cruise industry continue to reach new heights as demand for sea-based vacations keeps growing, Norwegian has taken a cautious approach amid the extra costs.
“The guidance that we provided are numbers that we feel confident with that we can deliver on,” Chief Executive Officer Harry Sommer said on a call with analysts. “I wouldn’t necessarily imply that there’s an upside that we haven’t factored in.”
The first quarter will also be impacted by increased dry dock days for ship maintenance and repositioning of some large vessels. As a result, net cruise costs excluding fuel are seen growing 3.9% in the current period. Absent the additional maintenance, costs would be up around 2.1%.
If industry trends hold, the cruise operator should outperform that conservative bar throughout the year, Truist Securities Managing Director Patrick Scholes wrote in a note to clients.
Optimism still abounds across the industry. Royal Caribbean, the world’s largest cruise company, approved a $1 billion buyback program and boosted its recently reinstated dividend earlier this month after its debt was upgraded to investment grade by S&P Global Ratings.
(Updates shares and adds management, analyst commentary starting in sixth paragraph.)
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