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Financial bounce-back for Royal Caribbean
Monday, 29 Apr, 2010
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Royal Caribbean Cruises has seen quarterly losses of a year ago turn around into profits on the back of a strong peak booking period.
The parent company of brands including Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises reported a first quarter net profit of $87.4 million against a loss of $36.2 million for the same period a year earlier.
The world’s second largest cruise group said second quarter yields were expected to improve by six per cent following a 2.5% rise in the first three months and between four and five per cent for the full year.
First quarter revenues improved year over year to $1.5 billion compared to $1.3 billion in the first quarter of 2009 as a result of capacity increases combined with net yield improvements, the company reported.
The company expects generate around $1.5 billion in EBITDA for 2010 and it does not anticipate a need to access the capital markets for the “foreseeable future”.
Based on current ship orders, projected capital expenditures for 2010, 2011 and 2012 are unchanged at $2.2 billion, $1 billion and $1 billion, respectively.
Capacity increases for the three years are 11.5%, 8.7% and 2.8%, respectively.
Chairman and CEO Richard Fain said: “While the economy is still affecting our results, we are pleased to be reporting better than expected revenues and costs and we continue to see a gradual and steady improvement in the booking environment.
“This recovery, combined with our cost containment efforts and improving fleet profile, bode well for improvement in our returns on investment and our balance sheet in 2011 and beyond.”
The company reported that the strong ‘wave’ peak booking season that it experienced in January continued through the first quarter.
"We provided initial yield guidance of an improvement of three to six per cent for the year with the insights gained from the first month of the wave season," said chief financial officer Brian Rice.
“Our initial estimates have proven accurate and since then, booking volumes and pricing have continued to significantly outpace last year.
“We now expect considerably higher yields in the second quarter and full year yield improvement of four to five per cent despite pressures from currency exchange rates.”
The company said it had made “significant progress” over the past quarter in optimizing the fuel consumption on many of its newer itineraries, as well as “fine tuning” the operations on its newest ships.
“The ongoing focus on fuel consumption has allowed the company to meaningfully reduce its full year 2010 consumption estimate to 1,346,000 metric tons of fuel versus the guidance the company provided in January 2010. This consumption reduction combined with favourable performance of the company’s fuel hedging portfolio has more than offset recent at-the-pump pricing increases,” the first quarter earnings statement said.
by Phil Davies
Phil Davies
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