Royal Caribbean Cruises Ltd. saw better-than-expected third quarter earnings, fueled in part by strong last-minute bookings for its North American cruises and increased passenger spending on-board ships.
The Miami-based cruise company said Friday it posted net income or profit of $693.3 million, or $3.21 a share, compared with $228.8 million, or $1.03 a share, in the same period in 2015 — a 67 percent jump. The 2015 quarter’s earnings had included $399.3 million in non-cash impairment charges related to its Spanish cruise brand Pullmantur, Royal Caribbean said in an earnings release.
Revenue during the quarter grew 1.6 percent to $2.56 billion vs. $2.52 billion a year ago. In particular, revenue from ticket sales rose 1.4 percent to $1.9 billion, while revenue from on-board spending and other items climbed 2.3 percent to $664 million.
The company’s quarterly adjusted earnings of $3.20 a share beat the Zacks Consensus Estimate analysts’ forecast by 3.2 percent, though revenue missed by 0.7 percent, according to Zacks Equity Research.
“It’s been a good quarter, and the future looks very bright,” Richard D. Fain, company chairman and CEO, told analysts during an earnings call. “Brexit (Britain’s vote to exit the European Union) and other factors have been unexpected blows, but we’ve more than compensated in other ways.”
In response to the news, Royal Caribbean shares jumped 9.4 percent in trading Friday and closed at $74.47.
During the quarter, the cruise company said it saw increased demand from consumers for beverage and high-speed internet packages on-board. Benefits from lower fuel prices and a weaker dollar also helped to buoy the quarter’s performance.
The company’s other cruise brands include Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises.
In looking to the fourth quarter, the cruise company’s sailings are almost 100 percent booked, with the exception of Empress of the Seas, said Jason Liberty, chief financial officer.
For the fourth quarter, Royal Caribbean is forecasting adjusted earnings of about $1.20 a share.
The overall outlook for all of 2016 is positive. “Our strong booked position and continued focus on effective cost management is expected to keep full year earnings ahead of initial guidance,” Liberty said.
For 2016, the company is expecting adjusted earnings in the range of $6 to $6.10 a share.
As of now, early indicators for 2017 also show “a solid outlook,” with more cruises booked and at higher prices than during the same time last year, Royal Caribbean said.
Those encouraging signs are due in part to strong demand for new ships such as Harmony of the Seas, which is set to arrive at Port Everglades next week, and Ovation of the Seas, now sailing in China, the cruise company said.
“New hardware, continued strength on-board, along with continued cost discipline and a highly motivated team over 65,000 strong, is proving to be a winning combination,” Fain said in the earnings statement.