Norwegian Cruise Line expects significant earnings hit in fiscal 2020 due to the Coronavirus outbreak

In its announcement on Thursday, Norwegian Cruise Line declared all its voyages in Asia to have been canceled till 2020’s third quarter. The company also estimated a 75 cents per share of earnings hit due to the recent outbreak of Coronavirus in China.

Following the announcement, the stock was seen trading 4% lower later in the day. The downward rally continued on Friday as well with the company closing the last week at $46.97 that marks just over 20% of loss in 2020 so far. Its performance in 2019, however, remained considerably upbeat with share prices rising around 40% last year. The $10.01 billion company opened at around $42 per share in January 2019 but closed the year significantly higher at around $52 per share.

Norwegian Cruise Line Canceled 40 Voyages Across All 3 Brands

According to Mark Kempa of Norwegian Cruise Line, a 25 cents per share of hit to the company’s profit in 2020’s first quarter is expected due to the health emergency in China. It also reported as many as 40 of its voyages (all 3 brands) have been canceled or redeployed in an attempt to contain the spread of the virus. Norwegian Cruise Line is liable to compensate the costumers following the cancelation.

CEO Frank Del Rio also commented on Thursday and reiterated that canceling the voyages was directed at ensuring that Norwegian Cruise Line doesn’t end up like the Diamond Princess that had its passengers and crew members (3,700 in total) quarantined following the identification of multiple Coronavirus cases on the ship. A passenger or a crew member who has been to Macau, Hong Kong, or China in the past month is no longer allowed to get on board Norwegian cruise ships.

Norwegian Cruise Line’s Guidance For Fiscal 2020

The cruise line also commented on Thursday that it will take a few months before the full impact of Coronavirus on the company’s financial performance can be assessed. The early signs of tourism being hit in general, however, have started to show.

In its guidance for fiscal 2020, the company highlighted that it now expected to make $5.40 per share to $5.60 per share of earnings this year. The reported figure was declared to have not accounted for any potential damage that stems from the Coronavirus outbreak. In a previous estimate, analysts had anticipated the Norwegian Cruise Line to make $5.51 of earnings per share in 2020, according to Refinitiv.