Royal Caribbean Reports Increased Earnings and Yields

Photo by Susan J. Young

Strong close-in demand for European and Asian sailings coupled with a strong performance in onboard revenue drove improved 2013 annual earnings for Royal Caribbean Cruises Ltd. ( parent company of the Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises brands.

On Monday, RCCL reported that its adjusted net income for the full year 2013 was $530.6 million, or $2.40 per share, compared to adjusted net Income of $432.2 million, or $1.97 per share, for the full year 2012. That’s a 22% year-over-year increase in adjusted earnings per share. Net yields increased 2.7% and net cruise costs were up 2.1%.

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However, the company’s $57 million in charges for global restructuring and the pending sale of non-cruise businesses by its Pullmantur brand put a dent in the profits.

For 2014, though, the outlook is good. The company said its adjusted earnings per share for 2014 are expected to be in the range of $3.20 to $3.40 per share.

It also expects 2014 net yields to increase approximately 2 percent. Robin Farley, a financial analsyst covering cruising for UBS Global Research, told her investors that the outlook was within market expectations.

"Six months ago we said we thought we had reached an inflection point and these figures clearly bear that out," said Richard D. Fain, chairman and CEO. "It has been a challenging year, but the fact that we have achieved our guidance from a year ago nicely demonstrates the strength of our business.

"Despite the lingering impact of 2013's negative media coverage on 2014, the year – and what it portends for future returns – is looking highly promising," Fain said.

The line also said bookings during the fourth quarter were on par with historical levels, and the company is experiencing a typical Wave Season early in 2014.

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Booked load factors are up year-over-year for the second, third and fourth quarter, and flat for the first quarter. Average per diems are ahead of same time last year in all four quarters.

For 2013, the company expects a net yield increase of 2 percent for the full year. While the Caribbean continues to feel pricing pressure, strong demand for our other itineraries has more than compensated, the line said, noting that both load factors and pricing are up significantly for sailings in Europe and Asia.

"We remain committed to improving our shareholder returns, returning to an investment grade credit and maintaining moderate growth," said Fain. On the fleet side, "we think that the ships we have on order for our wholly-owned brands will serve us well and we do not anticipate an additional new build for delivery in 2017,” he added.

Capacity increases for 2014, 2015, 2016 and 2017 are expected to be 1.7%, 6.9%, 6.7% and 4.1%, respectively. These figures do not include potential ship sales or additions.

In the fourth quarter of 2014, the Royal Caribbean International brand takes delivery of the first of three Quantum-class vessels. This is the first new ship delivery for the brand since 2010.