Royal Caribbean's 2016 Earnings Up 25 Percent, Advance Bookings at Record Levels

Royal Caribbean International's Oasis of the Seas(Copyright by Susan J. Young)

In its 2016 earnings report, Royal Caribbean Cruises Ltd. (RCL) reported U.S. GAPP (generally accepted accounting principles) earnings and adjusted earnings for 2016 of $5.93 and $6.08 per share, respectively, a 25 percent increase over the same period in 2015. 

The company also said, in a press release, that “forward bookings are at record levels.”  

For the full year 2016, U.S. GAAP net income was $1.28 billion versus $665.8 million in 2015. Last year's figure was negatively impacted by a charge related Pullmantur.

Adjusted net income was $1.31 billion, versus $1.07 billion in 2015. This exceeded both the company’s original guidance to financial analysts for the year and the most recent update as well.

Net yields were up 3.9 percent, net cruise costs excluding fuel up less than 1 percent. 

For the fourth quarter 2016, US GAAP and adjusted net income were $261.1 million, or $1.21 per share and $264.7 million, or $1.23 per share, respectively. That compared to $206.8 million, or $0.94 per share, for the same period in 2015.

Full Year 2017 Outlook

When looking ahead to the full year 2017, RCL said net yields are expected to increase 4 percent to 6 percent. Net cruise costs excluding fuel are expected to be flat. One piece of intel? “Foreign exchange and fuel prices are creating headwinds,” the line’s earnings press release noted.

RCL is now entering its so-called “double-double” year. This self-imposed objective by management focuses on doubling the company’s 2014 earnings per share by 2017 and increasing its return on invested capital to double digits.

"As we enter our double-double year, we have never been so well positioned," said Richard Fain, RCL’s chairman and CEO. "This program has done what it set out to do – bookings are at record levels, the preference our brands enjoy has never been stronger, we are on the cusp of investment grade ratings, our dividends are at an all-time high, costs have been well managed, and our guests' satisfaction has never been better.”

"We're halfway through Wave [Season] and so far it's quite strong," Fain told investors on a Thursday conference call.

Fain said the double-double program has helped reinforce the mindset and discipline across the cruise company’s organization. That’s what’s caused improvements, and “for that, I thank every one of the men and women whose passion and efforts are driving this performance,” said Fain. “While currency and fuel are both significant negatives at the moment, our business continues to thrive."

In its press release, the company said its “booked position for 2017 is better than last year's record high, and at higher rates.  Strength from North American consumers is driving exceptionally positive trends for North American and European products. These trends, along with a positive outlook for Australia and a solid booked position in China for the first half of the year, are positioning the company for robust growth in 2017.”

"Our global portfolio of products is demonstrating strength across virtually all key markets, positioning us to deliver strong yield growth in 2017," said Jason T. Liberty, RCL's chief financial officer.  "Strong topline growth combined with continued focus on cost management will generate another year of record setting results. Even with significant pressure from FX and fuel, we will deliver another stellar year."

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