Royal Caribbean Announces Third-Quarter Profits of $367.8 Million
By Theresa Norton Masek
October 25, 2012 10:42 AM
Royal Caribbean Cruises Ltd. announced third quarter 2012 net income of $367.8 million, or $1.68 per share, versus income of $399 million, or $1.82 per share, in the same period last year.
“The strong third quarter certainly validates our confidence in our business model,” said Richard D. Fain, chairman and CEO. “Strong close-in demand and our focus on costs drove substantially better results than expected. I am especially gratified that we are still seeing price increases in a year marked by so many external pressures.”
Close-in bookings for the third quarter across most itineraries — including Europe — were stronger than anticipated. The company noted that while it is very early in the 2013 booking cycle, the company said it is “encouraged” by the trends so far. For the year 2013, booked load factors and average per diems are both slightly higher currently than at this same time last year. The company said this “is particularly encouraging in light of the fact that these prior year comparisons relate to bookings before the Costa Concordia” sinking, which occurred on Jan. 13 in waters off the Italian island of Giglio.
That tragedy had its biggest yield impact in the second and third quarters of the year. The effect on bookings has continued to wane and fourth quarter 2012 net yields are expected to increase approximately 1 percent. The company increased its guidance for full-year earnings per share by 15 cents to a range of $1.85 to $1.95. This increase has been mainly driven by stronger-than-anticipated revenue and expense reduction.
The company also announced it was in talks to build a third Oasis-class-style ship. “A year ago, I thought two ships of that size was the right number, but they have continued to perform so well. … That overcame our reservations,” Fain said in a call with financial analysts. He also said the company traditionally does not comment publicly on newbuilds until a contract is signed. “This is slightly unusual, but because we’re so close, we thought it was appropriate to get the word out as to where we’re heading,” Fain said.