NCLH achieved Q2 adjusted net income of 85 cents per share, a dime ahead of last year and 2 cents above Wall Street's expectation. US GAAP profit was 64 cents per share, up from 69 cents in Q2 2015.
Revenue increased 9.3% to $1.19bn, up from $1.09bn but below anaylsts' estimate of $1.22bn.
'While successive geopolitical events dampened North American consumer demand primarily for our Mediterranean itineraries, our management team worked diligently to identify cost-saving opportunities to partially mitigate these impacts and generate solid adjusted EPS growth of 13%,' said Frank Del Rio, president and ceo, NCLH.
'It was a challenging booking environment where we remained mindful of our go-to-market strategy to minimize discounting and maintain our hard-fought pricing gains, resulting in lower occupancy, which in turn lowered on-board revenue and overall net yield growth compared to our expectations earlier in the year,' Del Rio continued.
Adjusted net yield improved 1.2% in constant currency or 0.8% as reported, mainly due to efficiencies in cost of sale, but lower than the forecast of up approximately 1.75% in constant currency.
Full-year adjusted EPS is now expected to be in the range of $3.35 to $3.45, down from earlier guidance of $3.65 to $3.85 and below the $3.72 Wall Street consensus. 2015 EPS was $2.88.
The Q3 guidance goes to $1.57 to $1.62, lower than the $1.78 consensus but above the year-ago $1.35.
Del Rio said that despite 'significant booking headwinds,' NCLH delivered earnings consistent with expectations, generating adjusted EPS growth of 20% for the first half of the year. For the second half, though, the outlook goes down, mainly due to four factors. They include continued weak demand from the company's core North American consumer for European sailings at a time when half of the NCLH fleet is deployed in the region, including eight of its highest yielding ships.
Other factors are the effect of a weaker British pound following the Brexit vote, an adjustment to earlier pricing expectations for Miami-based Caribbean itineraries, which continue to outperform prior year despite a doubling of capacity in the low season months, and the impact from maintaining pricing discipline to minimize discounting.
Though NCLH cut its guidance as a result, Del Rio expressed confidence the company will deliver strong earnings growth for full year 2016 and grow 2017 adjusted EPS in the range of 15% to 25%.
However, NCLH no longer expects to achieve its previously stated target of $5 adjusted EPS in 2017.
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