Royal Caribbean Profit Up on Strong Dollar, Cheaper Fuel
Miami-based cruise line Royal Caribbean Cruises Ltd. reported a 26% increase in second quarter earnings, saying it expects full year earnings to be almost 40% above last year, with the biggest drivers behind the growth being better foreign currency exchange and fuel rates.
The growth was in line with the company’s so-called ”Double-Double” program which has set targets to double Royal Caribbean’s per-share earnings by 2017 over 2014 levels, as well as increase its return on invested capital by double digits.
The company’s adjusted net income for the second quarter of 2015 was USD 185 million, or USD 0.84 per share, compared to adjusted net income of USD 146.7 million, or USD 0.66 per share, in the second quarter of 2014. US GAAP net income for the second quarter 2015 was USD 185 million, compared to USD 137.7 million in 2014.
While currency and fuel were the biggest drivers of the earnings increase versus guidance, net yields on a constant-currency basis, a cruise industry metric measuring revenue per available cruise day, also increased 4.2%. Better yields were driven by close-in pricing in the Caribbean and China.
Constant-currency net revenue yields are now expected to increase in the range of 2.9% to 3.9% for the full year, versus previous guidance of 2.5% to 4.0%, and net cruise costs excluding fuel are expected to be better than flat, versus previous guidance of flat to down 1%.
Royal Caribbean says bookings since the April earnings call have been healthy and the company continues to be booked ahead of last year in both load factor and APD, with a solid Caribbean environment compensating for softness on Latin American sailings associated with Pullmantur brand.
“Momentum in the Caribbean continues at a solid pace, and our strong booked position in the third and fourth quarters gives us confidence as we move through the second half of 2015,” said Jason T. Liberty, the company’s chief financial officer. “The trajectory of our brands is firmly on course for another record year of earnings, with healthy trends extending into the first quarter of 2016.”