Royal Caribbean Beats Expectations in Q1 2015

New York-listed cruise liner giant Royal Caribbean Cruises Ltd. has reported stronger than expected first quarter results and updated its outlook for the full year.

According to Royal Caribbean, commercially the year is turning out as expected, with strong booking trends and yield growth for all major products.

However, the strengthening of the US Dollar and the rise in fuel prices are negatively affecting earnings, but cost efficiencies are mitigating a large portion of the impact.

The company posted an adjusted net income of USD 45.2 million in the first quarter of 2015,  or USD 0.20 per share, versus a forecast of USD 0.10 to 0.15 per share.

The US GAAP net income was USD 45.2 million or USD 0.20 per share, versus USD 26.5 million or USD 0.12 per share in 2014.

The cruise liner said that strong close-in pricing on Caribbean sailings drove the better than anticipated performance.

Constant-currency net yields are expected to increase approximately 3.5% in the second quarter of 2015, the company said.

In terms of full year expectations, Royal Caribbean said that it expects adjusted EPS to be in the range of USD 4.45 to USD 4.65 per share – USD 0.20 lower than the company’s previous guidance. The strengthening of the US Dollar and the increase in fuel prices have negatively impacted the full year by USD 0.36.

Net Yields are expected to increase 2.5% to 4.0% on a Constant-Currency basis (down 0.5% to 2.0% As-Reported). The slight narrowing of the range is driven by somewhat weaker onboard revenue trends from non-US guests due to the strengthening of the US Dollar.

“It is gratifying to post another strong quarter with both revenues and expenses exceeding expectations,” said Richard D. Fain, Chairman and Chief Executive Officer. “Despite ongoing volatility in the currency and fuel markets, our Double-Double program remains solidly on track.”

Jason T. Liberty, the company’s Chief Financial Officer, added that further efficiencies have been identified driving a significant shift in the company’s cost guidance for the full year.

Overall booking volumes during the first quarter were higher than prior year levels even after adjusting for the company’s increase in capacity.

Overall, European itineraries are booked at a higher load factor and APD than last year, the company’s results for the first quarter of 2015 show.

“Western Mediterranean itineraries have been booking well, while trends have been a little weaker for Eastern Mediterranean itineraries, particularly those that turn in Turkey. Demand for China remains strong and bookings have been outpacing expectations despite the significant capacity growth in the region,” Royal Caribbean went on to say.