Royal Caribbean Expects Record Results in 2015

Early bookings for 2015 are robust and the current order book is better than at the same time last year in both volume and price, Royal Caribbean Cruises said in its third quarter results.

Based on this, the company’s current earnings estimates are consistent with Street consensus of USD 4.55 per share for 2015.

Third Quarter 2014 results:

  • Net Yields were up 4.2% on a Constant-Currency basis (up 4.9% As-Reported).
  • Net Cruise Costs (NCC) excluding fuel were down 1.2% on a Constant-Currency basis (down 1% As-Reported), better than guidance mainly due to timing.
  • Adjusted Net Income of USD 492.9 million, or USD 2.20 per share, versus Adjusted Net Income of USD 377 million, or USD 1.71 per share, in 2013.
  • US GAAP Net Income was USD 490.2 million or USD 2.19 per share, versus USD 365.7 million, or USD 1.65 per share in 2013.

It was another very positive quarter as we progress methodically toward our DOUBLE-DOUBLE goals,” said Richard D. Fain, chairman and chief executive officer. “We are positioned nicely on the eve of delivery of the highly anticipated Quantum of the Seas.”

Full Year 2014 forecast:

  • Net Yields are expected to increase approximately 2.5% on a Constant-Currency basis (1.5% to 2.0% As-Reported).
  • NCC excluding fuel are expected to be flat to slightly down on a Constant-Currency basis (Flat to down 1% As-Reported).
  • Adjusted EPS is expected to be approximately USD 3.45 per share.

“Despite the usual swings, the trajectory for 2014 continues along the path described three months ago,” said Jason T. Liberty, chief financial officer.

Bookings since the July earnings release have been solid and the company continues to be booked ahead of last year in both load factor and APD, based on the results.

“Double-digit yield improvements on Europe and China sailings continue to offset the continuation of a highly promotional Caribbean environment,” the cruise liner noted.

With regard to the outlook for 2015, the company said it was experiencing strong early booking trends for 2015.

” Booked load factors and APDs are higher than same time last year and the booking window has extended.  Europe sailings are off to a particularly good start, with strong booking trends from North America and from Europe.  Caribbean pricing pressure continues through the first quarter, but we expect it to improve thereafter, “ the company added.

According to Royal Caribbean, the view looking forward is very encouraging and the company is optimistic that 2015 will be the sixth consecutive year for yield growth.

“The company has sufficient visibility into 2015 to say that it is comfortable with the Street consensus of USD 4.55 per share. That would represent more than a 30% increase over this year’s record profitability.”

“We anticipate another record year in 2015, an important step on the way to DOUBLE-DOUBLE,” said Fain.

Our strategy continues to drive better revenues, and coupled with cost discipline and moderate growth, we will continue to excel.”

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