• Thu
  • Apr 17, 2014
  • Updated: 3:45pm

Star Cruises dives to US$68.9m loss

PUBLISHED : Wednesday, 16 August, 2006, 12:00am
UPDATED : Wednesday, 16 August, 2006, 12:00am
 

Firm's revenue grows 21pc but takes a hit on fuel costs and accounting losses


Star Cruises, the world's third-largest cruise liner behind Carnival and Royal Caribbean, dived to a loss in the first half despite a 21 per cent revenue growth, as income was eroded by soaring fuel costs and accounting losses related to its debt and investment.


Hong Kong-listed Star Cruises' net loss for the first six months was US$68.9 million, compared to a US$10.6 million profit a year ago on the back of high oil prices and intense pricing pressure on crowded Caribbean routes.


While best known locally for its casino cruises in the waters of the South China Sea, Star Cruises, a unit of Malaysia's Genting group, relies on the massive North American leisure market for more than 70 per cent of its revenue.


But cut-throat competition and higher staffing costs in overseas markets - together with a more than 50 per cent spike in global fuel prices since last year - have made for rough sailing.


The company said average fuel prices went up 42 per cent in the first half year on year and fuel costs accounted for 19.4 per cent of ship operating expenses, up from 15.1 per cent.


'The results are a bit grim, but it is not really that surprising,' said one analyst. 'A lot of these pressures are industry-wide.'


Still, its first-half operating profit edged up 2.1 per cent to US$54.6 million with turnover expanding to US$1.1 billion from US$868 million.


The operating profit, however, was largely wiped out by US$39.3 million of non-operating expenses, most of which were accounting losses from currency translation of its debt and write-down on its investment, compared to a non-operating income of US$20.2 million a year earlier.


Its finance costs surged to US$88.2 million from US$66.3 million, mainly due to a 35.8 per cent increase in interest expenses.


The increased costs mean that last year's significant capacity additions to Star Cruises' global fleet have so far failed to buoy the company's bottom line. The firm added three ships to its fleet in the west, and expanded its Asia footprint in September with the launch in India of the SuperStar Libra in an initial attempt to break into the market on the subcontinent.


In addition to operating cruise vessels, Star Cruises is currently part of a consortium including sister company Genting International and Universal Studios of the US that is bidding to develop Singapore's second casino resort on Sentosa Island.


Share

Login

SCMP.com Account

or