Shares of Royal Caribbean rose sharply on 31 July in the wake of better than expected quarterly results and a steadily improving cruise booking environment.
NYSE-listed Royal Caribbean posted net income of USD185 million for 2Q15 versus USD137.7 million in 2Q14. Earnings of USD0.84/share came in well above the analyst consensus estimate of USD0.73/share.
As a result of the earnings beat, the company’s shares were up in the high single digits on heavy volume in the hours after the results announcement.
Royal Caribbean’s net revenue yields, the best indicator of passenger spending, were up 4.2% (adjusted for currency) in the latest period, exceeding Royal Caribbean’s previous guidance for gains of 3.5%. The cruise company now expects full-year 2015 yield growth of 2.9-3.9% versus previous guidance for growth of 2.5-4%.
The yield upside in 2Q15 was driven by “close-in pricing in the Caribbean and China”, said the company. Caribbean strength more than offset “softness on Latin American sailings” being experienced by the company’s Pullmantur brand.
“Momentum in the Caribbean continues at a solid pace and our strong booked position in the third and fourth quarters gives us confidence as we move through the second half of 2015,” affirmed Royal Caribbean chief financial officer Jason Liberty.
According to UBS analyst Robin Farley, “Another positive [of the results announcement] was that Royal Caribbean is seeing record yields in Europe, given that this has been the region investors were concerned about. It sounds like the Western Mediterranean has strong demand at higher prices while the Eastern Med has been softer than expected.”