By Maxwell Murphy Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Cruise operator Royal Caribbean reported stronger-than-expected first-quarter results, with better bookings, yields and profits aided by lower costs and a gain from its fuel-oil hedges, despite the negative effects of the Japanese tragedy and unrest in north Africa. Still, even with its strong hedging program and the tonic effect of foreign currency exchange rates, along with improvements in other itineraries that partially offset the loss of business in troubled regions, Royal Caribbean cut its full-year, per-share earnings guidance by 15 cents and said second-quarter earnings would be at least 10 cents below the consensus view. Investors focused on the good news in the March quarter, however, and sent Royal Caribbean stock up 4.2% to $41.36 in Thursday morning trading. "The year started off with a roar," Chairman and Chief Executive Richard Fain said in a press release, "and in the first quarter every one of our brands exceeded its forecast. Unfortunately, the events in Northern Africa and Japan have turned what was shaping up as a spectacular year into merely a very good one." Industry observers had wondered how cruise lines would be affected by rising inflation and the slow pace of the U.S. economic recovery, coupled with burgeoning fuel prices, the Japanese earthquake and its subsequent tsunami and nuclear crisis, and the political unrest in places like Egypt and Libya. The company said it modified itineraries on 63 cruises based on the north African turmoil and modified 21 sailings after the Japan calamities. Royal Caribbean reported net income of $91.6 million, or 42 cents per share, which includes an 11-cent-per-share gain on the mark-to-market value of the company's fuel-option portfolio, compared with $87.4 million, or 40 cents a share, in the year ago period, which included an $85.6 million gain on a legal settlement. Revenue was $1.67 billion, up 12.5% from the prior-year period. Analysts surveyed by Thomson Reuters expected earnings of just 13 cents a share on revenue fractionally below what Royal Caribbean reported. Royal Caribbean previously said it would earn 10 cents to 15 cents for the quarter. For the second quarter, Royal Caribbean said it sees earnings of 40 cents to 45 cents per share, while analysts had expected 55 cents on average, and it sees net income of $3.10 to $3.30 for the full year, bracketing analysts for $3.24 and down from the company's previous view of $3.25 to $3.45 a share. Current WTI spot prices approach $115 a barrel. Royal Caribbean said it is 56% hedged for the remainder of this year at the equivalent of $75 a barrel of West Texas Intermediate, and 55% hedged next year at the equivalent of $86 a barrel. Shares of Royal Caribbean are up 19.4% over the past year and down 12.3% year to date. Larger rival Carnival Corp. (CCL), which reported its February-ended first quarter last month, rose 1.5% to $38.80 in recent trading. -By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; maxwell.murphy@dowjones.com
