Slumping demand for Mediterranean and Caribbean cruises, as well as discounting, took a chunk out of Norwegian Cruise Line's profit in the second quarter.
Norwegian Cruise Line Holdings Inc. cut its forecast for profit this year and next on lower demand for vacations from the U.S. to Europe and a weaker British pound after the Brexit vote.
Earnings this year will reach $3.35 to $3.45 a share, down from an earlier target of $3.65 to $3.85, Norwegian said Tuesday in a statement. The cruise operator also said it won’t reach its earlier forecast of $5 a share for 2017. Lower expectations for prices for Miami-based Caribbean tours and an effort to avoid discounting fares also weighed on the forecast.
Norwegian plummeted 7.3 percent to $39.82 in early trading. Carnival Corp. and Royal Caribbean Cruises Ltd. also dropped. Shares of all three cruise operators have declined this year, partially on concern that terrorist attacks in Europe and the Zika virus’s spread in Latin America and the Caribbean would hurt tourism.
In the second quarter, “successive geopolitical events dampened North American consumer demand primarily for our Mediterranean itineraries,” Norwegian Chief Executive Officer Frank Del Rio said in the statement.
©2016 Bloomberg L.P.
This article was written by Crayton Harrison from Bloomberg and was legally licensed through the NewsCred publisher network.
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Photo credit: This April 29, 2013 photo provided by Norwegian Cruise Line shows the Norwegian Breakaway, sailing from Southampton, England, to New York. Norwegian cut its profit forecast for the rest of 2016 because of slumping demand and discounting. Associated Press