Royal Caribbean Cuts 2016 Outlook
August 02 2016 - 2:20PM
Dow Jones News
Royal Caribbean Cruises Ltd. cut its 2016 earnings outlook amid
higher fuel costs and negative currency effects, including a hit
from a weaker British pound, as the cruise operator reported
second-quarter earnings rose 24%.
The Miami-based company's shares, down by a third this year,
fell 6.6% to $67.14 in recent trading, after it also issued
disappointing third-quarter guidance.
Royal Caribbean, whose brands also include its namesake and
Celebrity, among others, lowered its 2016 annual share-earnings
forecast to $6 to $6.10 from its previous projection of $6.15 to
$6.35.
Royal Caribbean said the lowered guidance reflects expected
negative fuel and currency effects totaling roughly 27 cents a
share, including 14 cents a share related to the depreciation of
the pound after Britain voted in June to exit the European
Union.
The company also adjusted its 2016 forecast for net yields—a
measure of revenue relative to capacity—to reflect the sale of a
51% stake in its Pullmantur Group, whose yields were below the
fleet average. Royal Caribbean now expects net yield, excluding
currency effects, to improve by 4.0% to 4.5%, compared with its
previous projection for net-yield growth of 2.5% to 4%.
The company reiterated its bookings for the rest of the year
remain strong, similar to last year's levels.
For the current quarter, Royal Caribbean forecast per-share
earnings of $3.10, below expectations of analysts polled by Thomson
Reuters for per-share profit of $3.39.
Royal Caribbean said continued strength in North America is
helping offset weakness in the Eastern Mediterranean and in
Shanghai.
On a conference call, Chief Financial Officer Jason T. Liberty
said geopolitical events have been straining close-in bookings and
pricing for its Eastern Mediterranean cruises and led the company
to make some operational changes in the region.
In China, a market where Royal Caribbean and its rivals have
been looking to for growth, Mr. Liberty said overall bookings have
been mostly within expectations, though there has been some
softness in demand in Shanghai in recent weeks.
Overall, Royal Caribbean reported a profit of $229.9 million, or
$1.06 a share, up from $185 million, or 84 cents a share, a year
earlier. Excluding restructuring-related charges and other items,
adjusted per-share earnings were $1.09, above company expectations
for per-share profit of roughly $1.
Revenue increased 2.3% to $2.11 billion, compared with analysts'
expectations for revenue of $2.17 billion.
Excluding currency fluctuations, net yields rose 1.1%%, in line
with expectations. Net cruise costs, excluding fuel, increased by
1.9%.
Write to Tess Stynes at tess.stynes@wsj.com
(END) Dow Jones Newswires
August 02, 2016 14:05 ET (18:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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