April 28, 2010 / 1:04 PM / 9 years ago

UPDATE 3-Royal Caribbean cuts net yield view; shares slump

* Royal Caribbean posts surprise profit

* Says impact of European travel disruptions $0.05/shr

* Royal Caribbean NYSE shares fall 4 percent (Adds comments from conference call, analyst comment)

By Richard Solem and Deepa Seetharaman

OSLO/NEW YORK, April 28 (Reuters) - Royal Caribbean Cruises Ltd (RCL.N)RCL.OL cut its net yield forecast for 2010, citing a strong U.S. dollar and travel disruptions in Europe due to the Iceland volcano.

Shares fell 4 percent to $34.80 in afternoon trading on the New York Stock Exchange. Its Oslo-listed shares shed 3.8 percent.

The No. 2 cruise operator in the world said it expects full year net yields, the revenue drawn from the available capacity on a cruise ship, to rise between 4 percent and 5 percent. Earlier it had projected a jump of as much as 6 percent.

“Top-end of yield guidance was lowered which could cause concern that pricing improvements have stalled,” Stifel Nicolaus analyst Steven Wieczynski said in a research note.

The company said it lowered the top end of its outlook because the dollar has strengthened since January and because of travel disruptions triggered by the Icelandic volcano.

Companies like Royal Caribbean generate earnings from their European units in local currencies, but that revenue is reported back in U.S. dollars. A stronger dollar cuts into those earnings.

During a call with analysts, company executives said that it would have lifted its net yield outlook by 1 percentage point had it not been for the impact of the stronger dollar.

“Investors are likely focusing on the strengthening dollar and to a lesser extent the one-time impact from the European travel disruptions, which likely impacted RCL’s ability to more meaningfully increase its FY10 guidance,” JPMorgan analyst Kevin Milota said in a research note.

Milota has an “overweight” rating on the stock.

QUARTERLY RESULTS BEAT STREET

Ticket prices for cruises have risen in recent months, helped by a brightening economy. Last month, Royal Caribbean’s bigger rival, Carnival Corp & Plc (CCL.N)(CCL.L) predicted recovery when posting its first quarter figures last month, boosting its shares. [ID:nN22221629]

Royal Caribbean reported a first-quarter net income of 40 cents per share, or $87 million, compared with a loss of $36 million, or 17 cents per share, a year earlier.

Stripping out a one-time gain, the company posted a profit of 1 cent per share, besting Wall Street estimates of a loss of 5 cents per share, according to Thomson Reuters I/B/E/S.

“While the economy is still affecting our results, we are pleased to be reporting better than expected revenues and costs and we continue to see a gradual and steady improvement in the booking environment,” Chief Executive Richard Fain said.

The Miami-based company said that the initial estimate for the recent European travel disruptions was a reduction of less than 5 cents a share, with most of the impact coming in the second quarter.

Royal Caribbean forecast second quarter earnings at $0.16 to $0.21 per share and raised 2010 earnings to $2.15 to $2.25 per share from $2-$2.20. [ID:nLDE63P1PW] (Reporting by Richard Solem and Deepa Seetharaman; Editing by Robert MacMillan)

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