Higher revenues boost RCL’s earnings

2019-07-28T11:40:05+00:00 July 28th, 2019|Finance|

Royal Caribbean Cruises (RCL) has reported record second quarter results in its second quarter 2019 presentation.
US GAAP net income for 2Q19 was $472.8 mill or $2.25 per share and adjusted net income was $532.7 mill or $2.54 per share. Last year, US GAAP net income was $466.3 mill or $2.19 per share and adjusted net income was $482.2 mill or $2.27 per share.

This improvement was mainly driven by increased revenue from the global brands, RCL said.

Gross yields were up 9.4% and net yields were up 9.5% in constant currency, within guidance. Greater demand for on board experiences, as well as strong close-in demand for the core products fully offset the impact from the travel restrictions to Cuba, which equated to 30 basis points for the quarter. In addition, lower interest expense contributed to the second quarter’s positive performance. Bunker pricing net of hedging for 2Q19 was $483.8 per tonne and consumption was 374,600 tonnes.

The company said that it expected its full year adjusted EPS to be in the range of $9.55 to $9.65 per share. The midpoint of the company’s latest adjusted EPS guidance was $9.45 – which included the impact of the Cuban travel restriction. Thus, the midpoint improved by about $0.15 per share, due to better 2Q19 results and an improved revenue outlook for the second half of the year. Net yields for the year are expected to increase 7.75% to 8.25% in constant currency.

This guidance includes the impact of around 70 basis points related to the discontinuation of the high yielding Cuba sailings. Excluding this impact, the midpoint of the company’s net yield guidance has improved by about 40 basis points versus the previous guidance, driven by better demand for core products in 2H19.

“The company’s booked position for the remainder of 2019 continues to set new records with all core products in line or ahead of the company’s previous expectations,” said Jason Liberty, RCL executive vice president and CFO. “While it is too early to provide detailed colour on 2020, we are delighted that bookings are already off to a very strong start.”

For the third quarter of this year, net yields are expected to increase about 6.5% in constant currency and 5.5% to 6% as-reported.
These metrics include around 340 basis points from the operation of Silversea, the new cruise terminal and the Perfect Day development. These net yields were negatively impacted by about 110 basis points related to the discontinuation of the Cuba sailings.

Based on current fuel pricing, interest and currency exchange rates, and the factors detailed above, the company expects third quarter Adjusted EPS to be approximately $4.35 per share.

“We are elated to see our brands executing so effectively, keeping our business in an exceptionally strong position,” said Richard Fain, chairman and CEO (pictured). “Our strategic focus on destinations, technology and people is clearly paying off. And, our core products are doing exceptionally well, driven by a gratifyingly robust demand for the Caribbean.”