Royal Caribbean Cruises Earnings: Margins Shrink as Costs Rise

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Royal Caribbean Cruises Ltd. (NYSE:RCL) swung to a loss in the second quarter, missing analysts’ forecast. Royal Caribbean Cruises operates in the cruise vacation industry. It owns five cruise brands: Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises and CDF Croisieres de France.

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Royal Caribbean Cruises Ltd. Earnings Cheat Sheet

Results: Reported a loss of $3.7 million (2 cents per diluted share) in the quarter. Royal Caribbean Cruises Ltd. had a net income of $93.5 million or 43 cents per share in the year-earlier quarter.

Revenue: Rose 3% to $1.82 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Royal Caribbean Cruises Ltd. fell short of the mean analyst estimate of 3 cents per share. Analysts were expecting revenue of $1.84 billion.

Quoting Management: “The steady drumbeat of negative news emanating out of Europe is certainly having an impact,” said Richard D. Fain, chairman and chief executive officer. Fain continued, “As a result, we are seeing pluses and minuses in the different geographical markets – North America is holding up reasonably well; Asia is a big plus; but Europe is a pretty consistent minus. Overall we have seen about a 100 basis point drop in our yield projections, but we expect to offset over half of this decline with lower spending.”

Key Stats:

Revenue has risen the past four quarters. Revenue increased 9.7% to $1.83 billion in the first quarter. The figure rose 10.7% in the fourth quarter of the last fiscal year from the year earlier and climbed 12.7% in the third quarter of the last fiscal year from the year-ago quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the first quarter, it topped the mark by 5 cents, and in the fourth quarter of the last fiscal year, it was ahead by 3 cents.

The company’s loss in the latest quarter follows profits in the previous three quarters. The company reported a profit of $47 million in the first quarter, a profit of $36.6 million in the fourth quarter of the last fiscal year and $399 million in the third of the last fiscal year.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the third quarter has moved down from $1.69 a share to $1.65 over the last ninety days. The average estimate for the fiscal year is now $1.98 per share, down from $2.01 sixty days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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