Royal Caribbean Cruises (RCL) has reported 2019 US GAAP earnings of $8.95 per share and adjusted earnings of $9.54 per share.
In addition, the company announced that the 2020 adjusted earnings are expected to be in the range of $10.4 to $10.7 per share. Given the fluidity of the circumstances related to the Wuhan Coronavirus and the actions being taken to contain its spread, the 2020 adjusted guidance provided herein does not include any financial impact related to the problem, RCL stressed.
The company has also introduced its ‘20>25 by 2025’ programme, which is designed to give people throughout the company specific goals to work towards. This programme includes several goals by 2025: delivering $20 adjusted earnings per share; further reducing the company’s carbon footprint by 25%; delivering strong returns on invested capital; and continuing to improve on record guest satisfaction and employee engagement metrics.
For 2019, US GAAP net income was $1.9 bill or $8.95 per share and adjusted net Income was $2 bill or $9.54 per share versus net income of $1.8 bill or $8.56 per share and adjusted net income of $1.9 bill or $8.86 per share in 2018.
Gross yields were up 8.2% in constant-currency (up 7% as-reported). Net yields were up 8% in constant-currency (up 6.7% as-reported).
Gross cruise costs per available passenger cruise days (APCD) increased 8.7% in constant-currency (up 8% as-reported). Net cruise costs (NCC), excluding fuel per APCD were up 11.4% in constant-currency (up 10.8% as-reported).
This year’s full guidance was boosted by the wave season, which started on a very robust basis with strong demand, especially in the US and European markets.
However, the Wuhan Coronavirus and the efforts to contain it are expected to negatively affect RCL’s results. While the company expected this to be temporary, the situation is highly fluid and the overall impact cannot reasonably be estimated at this time.
Accordingly, the guidance does not include any provision for the impact of the outbreak.
Net Yields are expected to increase 2.25% to 4.25% in constant-currency and 2.5% to 4.5% as-reported. NCC excluding Fuel per APCD is expected to increase 1.75% to 2.25% in both constant-currency and as-reported basis.
Adjusted earnings are expected to be in the range of $10.4 to $10.7 per share for this year.
“We are pairing ambitious business and environmental goals because we all understand that businesses must do our part to meet the needs of all our stakeholders,” said Richard Fain, chairman and CEO. “Over the last years, our people have worked hard to deliver strong performance on both profitability metrics and important societal goals. This 20>25 by 2025 programme should help take those efforts to the next level.”
The 2019 results were achieved despite a series of extraordinary events, including the drydock incident in the Grand Bahama shipyard, the cancellation of the cruises to Cuba and an unusual hurricane season, all of which negatively impacted last year’s results.
The consolidation of Silversea’s operations, the new cruise terminal in Miami, the Perfect Day development, new hardware and strong demand for our core products drove the year-on-year increase.
US GAAP net income for 4Q19 was $273.1 mill or $1.3 per share and adjusted net income was $297.4 mill or $1.42 per share. In 2018, net income was $315.7 mill or $1.5 per share, and adjusted net income was $322.1 mill or $1.53 per share.
The negative impact of the cancellation of the sailings to Cuba and the disruption generated by Hurricane ‘Dorian’ were the main drivers of the decline in the year-on-year results during the quarter.
Gross Yields were up 6.2% in constant-currency, while Net yields were up 6.8% in constant-currency, within guidance.
Gross cruise costs per APCD increased 9.6% in constant-currency. NCC, excluding fuel per APCD, were up 15.9% in constant-currency, higher than guidance driven by marine costs and employee related expenses.
Additionally, lower depreciation expenses and a higher contribution from RCL’s joint ventures positively impacted the quarter’s performance versus the guidance.
Bunker pricing net of hedging for 4Q19 was $468.4 per tonne and consumption was 380,400 tonnes.
“Our yield outlook for 2020 is very encouraging with higher pricing on top of an exceptional 2019 performance,” said Jason Liberty, executive vice president and CFO. “It’s clear that the Coronavirus will impact revenue in China in the short term, but we are a long-term business and our plans to continue growing this profitable market remain unchanged.
“We are also very excited about the introduction of our 20>25 by 2025 goals. Our formula for success is simple and our path towards our EPS goal is driven by moderately growing our yields, effectively managing our costs and moderately growing our business. Meanwhile, our emissions target, which is one of our many sustainability initiatives, will further focus our world-class design, engineering and operations teams to meaningfully improve our environmental impact,” he added.
RCL has already cancelled eight cruises out of China ending 4th March, and also modified certain itineraries in the region, which overall have an estimated impact of $0.25 per share.
As of 31st December, 2019, liquidity was $1.5 bill, including cash and the undrawn partof the company’s unsecured revolving credit facilities, net of the outstanding commercial paper borrowings.
Based upon current ship orders, projected capital expenditures for full year 2020, 2021, 2022 and 2023 are $4.7 bill, $3.5 bill, $3.6 bill and $2.9 bill, respectively. Capacity changes for 2020, 2021, 2022 and 2023 are expected to be 4.8%, 6.4%, 9.3% and 4.1%, respectively.
These figures do not include potential ship sales or additions that RCL will make going forward.