Kloster Cruise has reported net income of $6.5 million on revenues of $251.5 million for the third quarter ended September 30, 1993, compared to net income of $9.9 million on revenues of $202.4 million for the same period last year.
Kloster Cruise also reported operating income of $33.9 million for this year's third quarter compared to $23 million for the third quarter in 1992 - a 47 percent increase.
Revenues increased 24.2 percent for the third quarter which was attributed to the addition of the Dreamward, entering service in November of 1992, and the Windward, entering service this past May (1993).
Operating expenses increased 24.0 percent also due to the addition of the new ships and increases in advertising and passenger service personnel expenses.
According to Kloster Cruise, Norwegian Cruise Line (NCL) experienced a solid improvement in this year's third quarter compared to the third quarter of 1992, mainly attributable to a marked increase in load factor. The quarterly result was negatively impacted by a scheduled six-week dry docking of the Norway, however.
The results for Royal Viking Line (RVL) were reported to be slightly weaker in the third quarter than in the comparable period last year. A sharp increase in cruise capacity in European waters this past summer was said to have resulted in lower per diems, and was only partially compensated for by higher load factors.
Royal Cruise Line (RCL) also posted weaker earnings, according to Kloster Cruise, which attributed the result to mariginally lower per diems in the third quarter of 1993 compared to the same quarter in 1992, in addition to unscheduled maintenance and repair expenses on some of the division's ships.
For the nine month period ended September 30, 1993, Kloster Cruise posted a loss of $11.3 million on revenues of $692.6 million compared to net income of $22.4 million on revenues of $579.4 million for the same period last year.
Revenues for the nine month period in 1993 rose 19.5 percent compared to the same period in 1992, operating income rose eight percent from $51 million in 1992 to $55.1 million in 1993. Operating expenses rose 20.6 percent to $637.4 million in 1993 compared to $528.4 million in 1992.
The net loss for the nine month period includes a non-cash translation of debt gain of $6.7 million, a write-off of loan fees of $1.3 million and the expense recognition of a change in accounting principle of $7.8 million, according to Kloster, while the net income for the nine month period in 1992 included a $13.2 million gain on the sale of the Sunward.
Effective July 1, 1993, Kloster Cruise is expensing direct promotional costs for the introduction of new ships as such costs are incurred. Previously, direct promotional costs incurred in conjunction with new ship introductions were deferred and amortized using the straight line method over a period of three years.
The change in accounting principle was adopted at the recommendation of the Securities and Exchange Commission.
According to Kloster Cruise, the change will have no effect on the company's cash flow or compliance with its debt agreements. The $7.8 million cumulative effect of the change on prior years is included in the operating results of the nine months ended Sept. 30, 1993.
VARD, parent company to Kloster Cruise, reported a net loss of NOK 149 million (approximately $25 million) for the nine month period ended September 30, 1993, compared to a loss of NOK 3.2 million (approximately $450,000) for the same nine months in 1992.
Yard posted revenues of NOK 5.5 billion and operating income of NOK 479 million against finance costs of NOK 558 million, plus extraordinary expenses, adding up to a net loss of NOK 149 million, compared to revenues of NOK 4.1 billion, operating income of NOK 438 million, finance costs of NOK 342 million and a net loss of NOK 3.2 million for the same period in 1992.
Adam M. Aron, President and Chief Executive Officer of Kloster Cruise, stated, "While we are encouraged by the pace of actions being taken to improve the fortunes of Kloster Cruise, it will take some time for the fruits of our efforts to be realized."
Speaking at a presentation in Norway, Aron did not promise a quick turn-around.
Instead Aron pointed out that new efforts to raise the passenger satisfaction level will cost just as much as savings attained by cost cutting measures.
Aron said he expected the efforts, including smoke-free cabins, complimentary ice cream, and a new amenities package, in addition to a new advertising campaign, to produce improved results. But he would not define a time table.
Aron's strategy focuses on cost cutting ashore; improved passenger services aboard ships; higher cruise rates; improved relations with travel agents; and a better marketing effort.
After three months on the job, Aron said he was convinced that be will succeed.
At press time, Yard's shares traded at NOK 46 up from NOK 44 before the presentation of Yard's third quarter results and compared to a 52-week high/low of NOK 56/15.