Hurricanes cost Royal Caribbean $55M, but Q3 profit still rises

Royal Caribbean’s three Oasis-class ships.Royal Caribbean Cruises Ltd. reported an 8.6% increase in third-quarter net profit despite costs from the most destructive hurricane season in its history.

Net income rose to $752.8 million from $693.3 million. If not for five hurricanes in September, including two in the Pacific, Royal Caribbean said that net profit would have been $55 million more.

“That made it by far the most expensive hurricane season in our 45-year history,” chairman Richard Fain said in a conference call with analysts.

Royal Caribbean said strong close-in demand for cruises in July and August and higher onboard spending helped it offset hurricane-related costs and lost revenue from cancelled cruises and a decrease in bookings.

Fain said demand fell “precipitously” during September, both for cruises that month and for future bookings. The softness lasted about six weeks but bookings for virtually all itineraries are back to normal now, Fain said.

Fain said he thinks that travellers have become “inured” to disruptions such as hurricanes or terror attacks so that they are affecting booking patterns for shorter time periods than in the past.

Royal Caribbean said its forecast of adjusted full-year earnings of up to $1.59 billion still holds.

In the third quarter, revenue advanced slightly to $2.57 billion from $2.56 billion a year earlier.  Onboard revenue was up 5%, led by increases in internet usage and shore excursions.

Carnival Corporation reports strong Q1 profits

By Hollie-Rae Merrick

Carnival Corporation reports strong Q1 profits Carnival Corporation has reporter stronger-than-expected earnings for the first quarter of 2015.

The cruise company made a net profit of $49 million, or $0.06 diluted earnings per share in the last quarter, compared to a net loss of $20 million in the last year period.

It attributed its strong earnings to a rise in onboard revenues which were up 8% compared to 2014. Onboard spending rose to $889 million from $850 million, although revenue from ticket prices dropped around 3.5%.

Net revenue yields increased 2% in the first quarter of 2015, better than the company’s December guidance of up to 1%. However, gross revenue yields dropped 3.1% due to changes in currency exchange rates.

Looking ahead to 2015, Carnival Corporation said advance bookings were ahead of 2014 and at higher prices.

Chief executive and president Arnold Donald said: “The year is off to a strong start achieving significantly higher earnings than the prior year and our previous guidance.

“Our onboard revenue initiatives drove particularly strong improvement in the first quarter with onboard yields more than 8% higher than prior year (constant dollar).

“We are experiencing an ongoing improvement in underlying fundamentals based on our successful initiatives to drive demand. Our efforts to further elevate our guest experience are clearly resonating with consumers and, notably, improving the frequency and retention of our loyal guests.”

Donald said he believed results had improved off the back of “ongoing public relations efforts and creative marketing campaigns” designed to attract new customers. He referenced the success of the company’s Super Bowl advertising campaign which generated five billion impressions online before the ad had even run on TV.

He added: “Consistent with many global companies, the strengthening of the US dollar has hampered our full-year earnings expectations, masking the 3% to 4% (constant currency) yield increase our collective brands are expecting to achieve.

“Our successful initiatives to drive both ticket and onboard revenue yields have improved our financial performance and we remain on track toward our goal of achieving double-digit return on invested capital in the next three to four years.”

Folllowing a strong start to the year with bookings, Carnival said it expects full-year 2015 net revenue yields to increase 3% or 4% compared to 2014 and one point better than previous guidance for the year ahead.

However, changes in currency exchange rates means full-year 2015 earning expectations have been reduced by $219 million. Carnival said this was offset by an improvement in the company’s operating performance.

RCCL aims to double earnings per share over next three years

By Tom Stieghorst
Royal Caribbean Cruises Ltd. (RCCL) set a dual goal of boosting its return on invested capital to double digits and doubling its 2014 earnings per share over the next three years.

The “Double-Double” program was announced in its second-quarter earnings report, which showed net profit soared to $137.7 million, up from $24.7 million a year earlier.

In publicly announcing its financial targets, RCCL said “articulating clear and specific goals helps guide internal decision-making as well as better informing investors of the path of the business.”

Net yields for the quarter were up 2.6%, at the top of RCCL’s guidance, driven by strong booking trends for Europe and China sailings. There was continued softness in the Caribbean.

RCCL said that because of the strong quarter, it was boosting 2014 projected profit by $22 million to a range of $755 million to $777 million.

Second-quarter revenue rose to $1.98 billion from $1.88 billion a year earlier.