Royal Caribbean Profits Take a Hit
Royal Caribbean Cruises Ltd reported a much lower-than-expected quarterly profit as costs rose and passengers spent less onboard.
Shares of the company, whose cruise lines include Royal Caribbean International, Celebrity Cruises and Azamara Club Cruise, fell as much as 3.2 percent in early trading.
The company shortened or canceled six cruises during the January-March quarter, typically the strongest for cruise operators.
Voyage disruptions hurt yields, which include ticket sales and spending on board, by about 0.5 percent, the company said.
Net cruise costs excluding fuel rose 1.3 percent on a constant-currency basis in a quarter in which cruise liners usually offer their best deals.
The company expects smoother sailing in coming quarters as it expects higher bookings and continuing strong demand for its Chinese and European cruises.
Royal Caribbean said booking volumes rose about 18 percent in the past three months. Bookings jumped 20 percent in the past eight weeks.
"The company experienced a record booking week at the end of February, which is an unusual time for so much activity," the company said in a statement
The industry has just started to recover from negative publicity arising from a series of headline-grabbing mishaps, including virus outbreaks and engine fires, over the last two years.
Carnival Corp, the world's No. 1 cruise operator, forecast a full-year profit below analysts' estimates in March as it cut prices. It also plans to spend more on advertising to attract customers after onboard mishaps hurt demand.
Royal Caribbean raised its full-year earnings forecast to $3.25-$3.45 per share from its previous forecast of $3.20-$3.40 per share. It expects net yields to increase 2 percent to 3 percent.
The company said it expects second-quarter earnings of 45 cents-55 cents per share, largely above the average analyst estimate of 46 cents per share.
The company's net income fell 65 percent to $26.5 million, or 12 cents per share, in the first quarter ended March 31.
Excluding items, earnings were 21 cents per share, well below the average estimate of 28 cents per share.
Revenue fell 1 percent to $1.89 billion, in line with analysts expectations, according to Thomson Reuters I/B/E/S.
Royal Caribbean's shares were down 2.8 percent at $51.13 in morning trading on Thursday on the New York Stock Exchange. Carnival shares were up less than a percent at $37.67.
(Reporting by Devika Krishna Kumar and Siddharth Cavale in Bangalore; Editing by Maju Samuel and Saumyadeb Chakrabarty)