Tags: Royal | Caribbean | profit | Fuel

Royal Caribbean Cuts Profit Forecast on Fuel Costs

Friday, 20 Apr 2012 11:49 AM

Royal Caribbean Cruises Ltd., the world's second-largest cruise operator, cut its full-year forecast, citing higher fuel costs even as bookings continue to improve after a rival's deadly shipwreck in January shook the cruise industry.

Royal Caribbean, whose lines include its namesake along with Celebrity Cruises, said on Friday it now expects 2012 earnings per share of $1.80 to $2.10, compared with an earlier forecast of $1.90 to $2.30.

Higher fuel costs account for most of that reduction, denting profit by an expected 15 cents per share.

Royal Caribbean, which has faced slower business after the Costa Concordia accident of its larger competitor Carnival Corp. & Plc in January, said overall booking volumes since February, when it last gave a forecast, were down by a mid-single-digit percentage. The cruise operator has lowered prices in Europe to address that reduction in business.

But the company in a statement said that overall booking activity is "gradually" improving and that the effects of the Costa Concordia tragedy are "waning."

In the United States, where the Costa Concordia incident faded more quickly from headlines than in Europe, bookings in the last four weeks were ahead of the previous year period's.

Pricing has held up in all regions except Europe, the company said, while bookings overall for cruises in late 2012 and for 2013 are "strong."

"That points to a quicker recovery following the accident than had been expected," said Matthew Jacob, an analyst with ITG Investment Research. Still, the lingering uncertainty is weighing on the stock, he said.

Royal Caribbean expects net yields, a reflection of all the revenue a cabin generates, will be up 2 percent to 5 percent excluding the impact of currency.

The cruise operator's revenues and profit for the first quarter beat Wall Street expectations, despite the early hit to bookings.

Royal Caribbean earned net income of $47 million or 21 cents per share on revenue of $1.83 billion for the first quarter, compared with $78.4 million or 36 cents per share on revenue of $1.67 billion a year earlier.

Analysts were expecting a profit of 15 cents per share on revenue of $1.77 billion, according to Thomson Reuters I/B/E/S.

On Jan. 13, the Costa Concordia, a liner operated by the Costa Cruises unit of rival Carnival, hit a reef just off an Italian island and capsized, killing or hurting dozens. Last month, Carnival slashed its full year profit and sales forecast.

© 2017 Thomson/Reuters. All rights reserved.

 
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