Kloster 1989 Earnings

Kloster Cruise posted record earnings for 1989 of $43.3 million compared to $34.8 million in 1988. The increased earnings were attributed to greater cost cutting and improved load factors. But the results could have been better, according to the parent company, Vard, had the cruise operations not been affected by the clamp down in China, Hurricane Hugo and the Eastern strike. Vard, which recently released a preliminary record earnings report for its various companies, has seen its shares (A shares) rise close to NOK 158 (its all-time record high is NOK 161).

Kloster Cruise's net result of $43.3 million comes from estimated total 1989 revenues of $469 million. Norwegian Cruise Line achieved an overall load factor of 99 percent for the year and Royal Viking Line, better than 70 percent.

Sources close to the company estimated that the cancellation of China cruises cost the company in the neighborhood of $10 million; the Eastern strike four to five million dollars; and Hugo from one to two million. Sources speculate that 1990 net earnings would be close to $60 million on the company's momentum alone, barring any unforeseen circumstances.

According to source's, Kloster's 1989 cash flow was about $75 million, and the company's net worth about $1.5 billion (based on an average per bed evaluation of $150,000 for its 10,500 berths).

The cruise company's Chairman, Trygve Hegnar, who is also on the board of the parent company, said that investors had begun to realize that not only earnings are important, but also the company's cash flow, and the values of the company's cruise fleets.

Hegnar also noted that net earnings were about 10 percent of revenues and were up 26 percent from last year in spite of the impact of circumstances beyond the company's control.

Hegnar confirmed that the company is still negotiating for newbuildings and that its short list consists of Masa Yards, Rauma-Repola, Chantiers, and Bremer-Vulkan. Kloster has for some time indicated that it is looking to build a fleet of 1,000 to 1,200-passenger vessels which can be deployed in different markets.

Kloster has also announced that it will be adding 120 staterooms to the top deck of the Norway. The building contract reported to be worth $25 million is presently being negotiated with a German yard which the company would not identify.

According to Hegnar, the Norway's top deck will in fact become a "new'' ship with staterooms comparable to those of the Seabourn Cruise Line vessel. He was quoted as saying that "we are building a new luxury ship on top of the Norway."

Total capacity of the Norway today is 2,400 passengers in lower and upper berths. With the additional 130 staterooms, the Norway's capacity would exceed the 2,600-passenger maximum capacity of the Sovereign of the Seas in fact making the Norway again the largest cruise vessel in the world in terms of passenger capacity.

The Norway is the former transatlantic liner France which was rebuilt at a cost of more than $100 million at Lloyd's Werft in Bremerhaven in 1979/80.

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