Mon 26 Feb 2018 12:45

NCL's bunker costs rose 7.7% in 2017


Vessel operator expects average fuel price to be steady in 2018 at $465.



Norwegian Cruise Line Holdings (NCL) reports that fuel expenses rose by $25.9 million, or 7.7 percent, to $361.0 million in 2017 compared to the previous year.

In the fourth quarter (Q4) of 2017, bunker costs increased by $7.6 million, or 8.8 percent, to $94.3 million.

The average fuel price per tonne, net of hedges, dipped just $1 to $465 during the last calendar year, whilst in Q4 the mean bunker price was up $1 to $460.

Forecasting

Below is NCL's forecast for fuel consumption and pricing for Q1 and full year (FY) 2018.

Fuel consumption in metric tonnes:

Q1 2018: 205,000
FY 2018: 840,000

Fuel price per metric tonne, net of hedges:

Q1 2018: $450
FY 2018: $465

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

Q1 2018: $0.02
FY 2018: $0.08

Hedging

As of December 31, 2017, NCL says it had hedged approximately 65, 48, and 26 percent of its total projected metric tonnes of fuel consumption for the full year 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.

2018

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

% of MGO consumption hedged: 21%
Average Brent price/barrel: $46.50

2019

% of HFO consumption hedged: 57%
Average USGC price/barrel: $47.82

% of MGO consumption hedged: 21%
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: $49.25

Overall results

In its overall results, NCL posted record full-year net income after tax of $759.9 million, which was an increase of $126.8 million, or 20.0 percent, on the $633.1 million figure achieved in 2016.

For Q4, net income rose 26.6 million, or 36.8 percent, to $98.8 million, which was also the company's best ever earnings result.

Calendar-year revenue increased by $521.8 million, or 10.7 percent, to $5,396.2 million, whilst Q4 revenue grew $124.4 million, or 11.1 percent, to $1,249.5 million.

Commenting on the results, Frank Del Rio, NCL president and chief executive officer, said: "The strong, record performance we delivered in 2017 was the perfect end to a historic year as we celebrate the five year anniversary of our initial public offering. Over the last five years we have continued our track record of consistent financial performance with a more than sixfold increase in EPS, a doubling of revenue and the expansion of Adjusted ROIC to double-digit levels.

"It has been a remarkable journey for our Company with more major milestones to come and an amazing trajectory of profit growth for 2018 and beyond. Our solid revenue and earnings performance will continue in 2018, having entered the year in the best booked position in our Company's history with pricing above prior year across all three of our brands."


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