Royal Caribbean Cuts Profit Forecast

Royal Caribbean Cruises Ltd cut its adjusted profit forecast for the year, citing a jump in fuel prices since its January forecast and a strong dollar.

 

Shares of the world's second-largest cruise operator, which also cut the higher end of its full-year net yields forecast, fell 9.3 percent to a more than four-month low on Monday.

 

Fuel prices have risen 14 percent and the dollar has gained 3.5 percent since the company's previous forecast, Royal Caribbean executives said on a post-earnings call.

 

The company said it now expects fuel expenses of $834 million this year based on current prices, up from its previous forecast of $806 million.

 

The Miami-based cruise operator cut its earnings expectations to $4.45-$4.65 per share for the year ending December, from the $4.65-$4.85 it previously forecast.

 

The latest forecast includes a 20 cents per share impact from the strong dollar and 16 cents from higher fuel prices.

 

Analysts said they were more surprised by the cut in the company's net yields forecast.

 

"There was a building expectation on the part of buy-side investors for RCL to raise its constant currency yield guidance, following a 100 basis point increase from rival Carnival during its (first quarter) earnings release," Stifel, Nicolaus & Co analyst Steven Wieczynski wrote in a note.

 

Larger rival Carnival Corp last month forecast net yields to rise 3-4 percent for the full year.

 

Royal Caribbean said on Monday that it expected the higher end of its net yields to rise 4 percent, down from its earlier forecast of 4.5 percent. The company kept the lower end unchanged at 2.5 percent.

 

The company's net yield in the first quarter ended March 31 was down 1 percent on a constant-currency basis.

 

Revenue fell 3.7 percent to $1.82 billion as a strong dollar crimped onboard purchases by customers from outside the United States.

 

Lower cruise operating expenses boosted the company's net income to $45.2 million, or 20 cents per share, from $26.5 million, or 12 cents per share, a year earlier.

 

Analysts on average expected a profit of 13 cents per share on revenue of $1.86 billion, according to Thomson Reuters I/B/E/S.

 

Shares of the company were down 7.3 percent at $73.26 on the New York Stock Exchange in afternoon trading.