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Norwegian Cruise Line Holdings Ltd (NCL) reports that fuel expenses rose by $6.1 million, or 7.5 percent, to $86.7 million during the second quarter (Q2) of 2017 compared to the corresponding period last year.

In the first half (H1) of 2017, fuel costs increased by $13.3 million, or 8.2 percent, to $175.5 million.

The average fuel price per metric tonne in Q2, net of hedges, was $469 - the same figure as last year.

Forecasting

Below is NCL's forecast for fuel consumption and pricing for Q3 and FY 2017.

Fuel consumption in metric tonnes:

Q3 2017: 195,000
FY 2017: 785,000

Fuel price per metric tonne, net of hedges:

Q3 2017: $455
FY 2017: $456

Effect on Adjusted EPS of a 10% change in fuel prices, net of hedges:

Q3 2017: $0.01
FY 2017: $0.03

Hedging

As of June 30, 2016, NCL says it had hedged approximately 76, 65, 48 and 26 percent of its total projected metric tonnes of fuel purchases in 2017, 2018, 2019 and 2020, respectively.

Below is a summary of NCL's hedged and price per barrel of heavy fuel oil (HFO) and marine gas oil (MGO), which are hedged utilizing U.S. Gulf Coast 3% (USGC) and Brent, respectively.

Remainder of 2017

% of HFO consumption hedged: 85%
Average USGC price/barrel: $59.85

% of MGO consumption hedged: 57%
Average Brent price/barrel: $41.11

2018

% of HFO consumption hedged: 80%
Average USGC price/barrel: $53.02

% of MGO consumption hedged: 20%
Average Brent price/barrel: $46.50

2019

% of HFO consumption hedged: 58%
Average USGC price/barrel: $47.82

% of MGO consumption hedged: 20%
Average Brent price/barrel: $49.25

2020

% of HFO consumption hedged: 52%
Average USGC price/barrel: $39.50

% of MGO consumption hedged: 11%
Average Brent price/barrel: $51.85

Overall results

In its overall results, NCL posted a year-on-year (YoY) rise in Q2 net income of $53.2 million, or 36.6 percent, to $198.5 million.

For H1, the YoY increase was 41.9 million, or 19.2 percent, to $260.4 million.

Q2 revenue was up $157.3 million, or 13.3 percent YoY to $1,344.1 million, whilst revenue for H1 grew $230.4 million, or 10.2 percent, to $2,494.9 million.

Commenting on the results, Frank Del Rio, NCL president and chief executive officer, said: "Positive consumer sentiment in North American and key international markets has resulted in a robust booking environment that continues to be one of the strongest in recent history which, combined with our targeted strategic revenue initiatives drove second quarter revenue and yield growth well above expectations."