Royal Caribbean Cruises Ltd. Posts Higher 1st Quarter Earnings

Royal Caribbean International's Allure of the Seas, docked at Labadee, Haiti // Photo by Susan J. Young

First quarter 2016 earnings increased for Royal Caribbean Cruises Ltd. (RCL), parent company of Azamara Club Cruises, Celebrity Cruises and Royal Caribbean International. The world’s second largest cruise company said adjusted net income was $124 million versus $45 million for the same quarter a year ago.

Quarterly net yields year-over-year were up 7 percent, attributable to strong close-in Caribbean bookings and better onboard revenue; the latter was driven by higher beverage and Internet sales. Foreign exchange and fuel also contributed to the “upside.” 

Net cruise costs excluding fuel increased 4.7 percent.

Looking Ahead

Celebrity Cruises pool scene // Photo by Susan J. Young

In projecting its full year 2016 outlook, overall, the company's “booked position” remains strong, similar to last year's record high levels.

However, RCL said China (where it now has several turnaround ships) is a closer-in booking environment, making it harder to compare positions between one year and the next. Still, it reports that excluding those China bookings, the company's booked position is well ahead of last year's.

Net yields for full year 2016 are expected to increase 2.5 percent to 4 percent, while full year adjusted earnings per share should be in the range of $6.15 to $6.35 per share.

That's $.25 higher than previous guidance. RCL credits the heightened projection to strength in North American cruise products, onboard revenue trends and stronger foreign currencies.

"The first quarter has given our year momentum, which is more than offsetting some headwinds from the Mediterranean," said Jason Liberty, chief financial officer. "This performance is positioning us for the highest earnings in company history."

As of the end of the first quarter 2016, the cruise company’s liquidity was $.7 billion including cash and the undrawn portion of the company's unsecured credit facilities.

Based upon current ship orders, projected capital expenditures for full year 2016, 2017, 2018, 2019 and 2020 are $2.4 billion, $0.5 billion, $2.5 billion, $1.4 billion and $1.7 billion, respectively.

Capacity increases for 2016, 2017, 2018, 2019 and 2020 are expected to be 6 percent, 4 percent, 3.5 percent, 6.3 percent and 3 percent, respectively, given the current fleet.

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