Star Group 2006 Q3 Results

The Star Group has reported net income of $60.4 million, or $1.11 per share, on revenues of $683.3 million for the third quarter ended Sept. 30, 2006, compared to net income of $33.0 million, or $0.62 per share, on revenues of $575.3 million for the third quarter of 2005.

The results were driven by a 17.7 percent increase in capacity year-over-year, as well as a $16.7 million gain from the sale of the Norwegian Crown and $7.3 million in shipyard compensation (part of a $50 million settlement in the partial sinking of the Pride of America at Lloyd Werft.)

For the nine-month period ended Sept. 30, 2006, Star posted a net loss of $8.6 million on $1.8 billion in revenues, compared to net income of $43.6 million $1.4 billion in revenues last year.

NCL Group

According to Star, net revenue for the NCL Group was 15.1 percent higher in Q3 2006, driven by a 15.2 percent increase in capacity which was partially offset by a 0.1 percent decrease in net revenue yield. The occupancy level was 107.8 percent, compared to 108.7 percent last year.

Ship operating expenses went up 2.1 percent this year due to higher payroll and related expenses and fuel costs partially offset by other operating efficiencies. SG&A expenses decreased 10.9 percent compared to last year as a result of a decrease in advertising and promotional expenses.

Bookings continue to be closer to the sailing date than at the same time last year, according to Star.

Through Q1 of 2007, NCL continues to see downward pressure on pricing, especially in the Caribbean and in Hawaii. As a result, for Q4, NCL expects net yield to be down approximately 1.0 percent compared to last year.

Star Cruises

Capacity was up 30.1 percent year-over-year for Star Cruises, but net revenue was down 3.4 percent as a result, with net revenue yield down 19.9 percent. Occupancy was down to 83.7 percent with lower than average occupancy for the Superstar Libra in the Mediterranean.

Ship operating expenses were down 15.4 percent per capacity day, compared to Q3 2005, mainly due to the start-up expenses of the Superstar Libra as well as the lay-up expenses of the Norway last year, partially offset by the higher charter fee paid for the Norwegian Crown and higher fuel prices in 2006.

For the full nine months of the year, capacity was up 3.1 percent, compared to last year because of the addition of the Superstar Libra. Net revenue was 6.2 percent higher as result of the higher capacity, but net revenue yield was down 17.8 percent, due to the lower than average occupancy on the Superstar Libra, both in India and the Mediterranean.

Occupancy level for the first nine months of 2006 was 82.3 percent, compared to 96.3 percent last year.

Due to ongoing cost saving initiatives, ship operating expenses decreased 8.6 percent during the first nine months of this year, offset by higher fuel costs.

The Superstar Libra is now in India for her second season and, according to Star, the market response to her amended itineraries is encouraging with bookings considerably higher than at the same time last year.


While Star posted net income for Q3 2006, without the contribution from the sale of the Norwegian Crown and the shipyard compensation payment, net income would have been $34.3 million, just above last year’s $33.0 million.

Net income was also negatively impacted by higher financial costs year-over-year.

Operating income was $82.7 million this year, compared to $78.5 million last year.

On a per passenger day basis, operating income was $29.28 this year, compared to $31.69 last year – for a decline of 7.6 percent.

Ticket vs. Onboard

Star Cruises also stated that passenger ticket revenues were $463.2 million for Q3 this year, compared to total revenues of $683.3 million. The remaining portion of $220.1 million (32.2 percent) is onboard and related services, according to Star.

For Q3 2005, the comparable figures were $383.6 in ticket revenues and total revenues of $575.3, with onboard and other revenues of $191.7 million (33.3 percent).

Other Developments

In related news, NCL still plans to remove three more of its older ships, the Norwegian Majesty. Norwegian Dream and the Marco Polo, by 2010.

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