RCCL Second-Quarter Profits Surge

PHOTO: Royal Caribbean's eye-catching Quantum of the Seas is expected to enter service in November. (Rendering courtesy of Royal Caribbean International) 

Royal Caribbean Cruises Ltd. reported a five-fold increase in profits as second-quarter net income surged to $137.7 million, or 62 cents per share, compared to $24.7 million and 11 cents per share during the same quarter in 2013.

The cruise company also introduced what it calls the “Double-Double Program,” a three-year initiative designed to increase return on invested capital (ROIC) to double digits and doubling 2014 earnings per share.

“Our focus over the last few years on improving investment returns with moderate capacity growth is clearly paying dividends,” said Richard D. Fain, chairman and CEO. “Our brands have never been stronger and we are well positioned for continued step change in performance. The Double-Double Program sets demanding, but realistic, targets, against which we will measure our continued progress.”

The company credited its strong second-quarter performance to strong close-in bookings and double-digit yield growth in Europe and China, which offset continued weakness in the Caribbean.

“Higher pricing for close-in European sailings propelled us above the top end of our guidance for the quarter,” said Jason T. Liberty, chief financial officer. “While the environment in the Caribbean remains promotional, our European itineraries continue to resonate well with strong demand from all markets.”

Plus, onboard revenue increased 3 percent in the quarter, making it the 10th consecutive quarter it has grown.

The company outperformed the mid-point of guidance for the second quarter by 16 cents. It raised its full-year adjusted earnings-per-share guidance to a range of $3.40 to $3.50. Third-quarter adjusted EPS was expected to be approximately $2.20 per share.

In a conference call with financial analysts, Fain said goals of the “Double-Double Program” are to optimize revenues, control costs and maintain moderate growth of 3 to 5 percent average growth per year. “We believe it continues to be an appropriate range for us,” he said. “Of course, ship deliveries come in big lumps. But over time, the average has been and should continue to be in that range.”