Tags: Royal | Caribbean | cruise | RCL

Royal Caribbean Expects Cruise Growth

By    |   Tuesday, 15 Nov 2011 04:00 PM

Cruise line company Royal Caribbean (RCL) has struggled with the combination of economic uncertainty and higher fuel costs. The recently completed 2011 third quarter produced cruise profits growth, however, and the company expects to see better times with an economic recovery.

Royal Caribbean Cruises operates the Royal Caribbean International, Celebrity Cruises, Pullmantur and Azamara Club Cruises. The company owns 40 cruise ships with a total capacity of over 92,000 passengers. Two cruise ships are on order for delivery in 2012. Revenue comes from two sources: ticket sales and onboard sales of food, beverages, items, gambling and shore trips. About 75 percent of revenues come from ticket sales and the other quarter from onboard sales.

The third quarter is Royal Caribbean’s major revenue and profit generation quarter. For the third quarter of 2011, the company reported net income of $1.82 per share, up 14 percent from the $1.61 earned in the third quarter of 2010. The estimated earnings for all of 2011 is $2.86 per share, so the third quarter earnings accounted for 64 percent of the full year profits.

Reduced guidance

With the second quarter earnings release in July, Royal Caribbean management reduced the revenue and profit guidance for the remainder of the year. As a result the share price lost one-third of its value.

The share price took the next three months to recover. On the good news front, in the second quarter the company reinitiated the payment of a quarterly dividend. The 10 cents distribution was the first dividend since the second quarter of 2008.

In the third quarter earnings press release, management stated bookings for 2012 were ahead of the year ago pace in both numbers of tickets sold and ticket prices. After bottoming with the economic recession in 2009 and reporting just 75 cents per share in earnings, profits increased to $2.51 per share in 2010, a forecast $2.86 in 2011, and the consensus estimate for 2012 is earnings of $3.18.

The most recent Wall Street report on RCL is from the analysts at Argus Capital Partners, who downgraded their rating on the stock to hold from buy.

The company next reports on Jan. 26.

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Cruise line company Royal Caribbean (RCL) has struggled with the combination of economic uncertainty and higher fuel costs. The recently completed 2011 third quarter produced cruise profits growth, however, and the company expects to see better times with an economic...
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2011-00-15
Tuesday, 15 Nov 2011 04:00 PM
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