(Adds details from conference call, COO comments, background;
By Devika Krishna Kumar
April 24 Royal Caribbean Cruises Ltd,
the world's second-largest cruise operator, said its quarterly
profit fell by two-thirds as costs rose and passengers spent
Shares of the company, whose cruise lines include Royal
Caribbean International, Celebrity Cruises and Azamara Club
Cruise, fell as much as 3.2 percent in early trading.
The company shortened or canceled six cruises during
January-March, typically the strongest season for cruise
Voyage disruptions hurt yields, which include ticket sales
and spending on board, by about 0.5 percent in the first quarter
ended March 31.
Royal Caribbean said its cruise operations were hurt by
several mishaps in the first quarter.
The company and its larger rival Carnival Corp faced
disruptions when a collision between Kirby Inland Marine oil
barge and a cargo ship in March spilled residual fuel oil in the
Gulf of Galveston, shutting the Houston Ship
The cruise industry has just started recovering from
negative publicity after a series of headline-grabbing mishaps,
including virus outbreaks and engine fires, over the past two
Carnival, the world's No. 1 cruise operator, forecast a
full-year profit below analysts' estimates in March as it cuts
prices and spends more on advertising.
Royal Caribbean has also been struggling to boost sales in
the Caribbean, its biggest market.
"While we were seeing strong bookings for the Caribbean with
recent booking volumes trending well above last year's levels,
the environment remains very promotional," Chief Financial
Officer Jason Liberty said on a post-earnings conference call.
Royal Caribbean said it expected pricing in the Caribbean to
remain under pressure this year.
"We needed to introduce more promotions (in the Caribbean)
in March and April to close the occupancy gap," Chief Operating
Officer Adam Goldstein told Reuters.
Net cruise costs, excluding fuel, rose 1.3 percent on a
constant-currency basis in a quarter in which cruise liners
usually offer their best deals.
SMOOTH SAILING AHEAD
Royal Caribbean said it expected smoother sailing in the
coming quarters as bookings were seen rising and demand for its
Chinese and European cruises was expected to stay strong.
The company said it expected double-digit percentage rise in
yields in its Europe and Asia Pacific cruises this year.
Europe cruises account for 22 percent of the company's
capacity, while Asia Pacific sailings make for 12 percent.
Royal Caribbean said booking volumes rose about 18 percent
in the past three months. Bookings jumped 20 percent in the past
"The company experienced a record booking week at the end of
February, which is an unusual time for so much activity," Royal
Caribbean said in a statement
Royal Caribbean raised its full-year earnings forecast to
$3.25-$3.45 per share from $3.20-$3.40 per share. The company
said it expected net yields to rise by 2-3 percent.
The cruise operator forecast earnings of 45-55 cents per
share for the second quarter ending June 30.
Analysts on average were expecting 46 cents per share,
according to Thomson Reuters I/B/E/S.
Royal Caribbean's net income fell 65 percent to $26.5
million, or 12 cents per share, in the first quarter.
Excluding items, the company earned 21 cents per share, well
below the average analyst estimate of 28 cents.
Revenue fell 1 percent to $1.89 billion, in line with
Royal Caribbean's shares were down 1 percent at $51.93 on
Thursday afternoon on the New York Stock Exchange. Carnival
shares were up 1.3 percent at $37.89.
(Additional reporting by Siddharth Cavale in Bangalore; Editing
by Maju Samuel, Saumyadeb Chakrabarty and Kirti Pandey)