Royal Caribbean Cruises Ltd (RCL.N), the world's second-largest cruise operator, reported lower first quarter earnings and cut its full-year profit forecast, citing higher fuel costs and the impact on bookings of a rival's deadly shipwreck in January.
Royal Caribbean, which has faced slower business after the Costa Concordia accident of its larger competitor Carnival Corp & Plc (CCL.N) (CCL.L) in January, said overall booking volumes since February were down by a mid-single-digit percentage.
But the company said overall booking activity is "gradually" improving and that the effects of the Costa Concordia tragedy are "waning".
Royal Caribbean shares closed down 6.8 percent to $26.92 on Friday afternoon.
The cruise operator 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.
Royal Caribbean's first quarter net income fell to $47 million, or 21 cents per share, on revenue of $1.83 billion, from $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.
The company forecast current quarter earnings ranging from a loss of 5 cents per share to a profit of 5 cents per share.
"The market is still highly volatile, highly uncertain," Chief Executive Richard Fain told analysts on a conference call.
SOME SIGNS OF IMPROVEMENT
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.
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 has lowered prices in Europe to address that reduction in business.
On January 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.
(Reporting By Phil Wahba; Editing by Gerald E. McCormick and M.D. Golan)