Royal Caribbean Cruises Ltd. (RCL) swung to a second-quarter
loss amid charges and lower revenue, as the cruise-ship operator
posted its second straight quarterly loss amid a prolonged slump in
travel spending.
The company also issued a weak third-quarter view and lowered
its full-year outlook, while boosting its expectation of the
effects of the H1N1 virus on its earnings.
Shares were down 6.7% at $15.30 in premarket trading. The stock
has lost roughly a third of its value in the past year, though it
has tripled from an all-time low in March.
For the year, Royal Caribbean expects net yields to fall about
14% this year, lower than its April view of a 12% to 13% drop, and
cut its earnings target to 70 cents to 80 cents a share from
$1.35.
The second largest cruise-ship operator by market by share
behind Carnival Corp. (CCL) last month said bookings and prices met
expectations globally except in Spain, though strengthening fuel
costs and foreign-exchange effects remained a concern. Royal
Caribbean said it mitigated much of the ongoing fuel-cost increases
through hedging and paring other expenses.
The company, whose brands include Celebrity, Pullmantur and
Azamara, reported a loss of $35.1 million, or 16 cents a share,
compared with a prior-year profit of $84.7 million, or 40 cents a
share. The loss included 5 cents in costs related to the H1N1 virus
and about 11 cents due to currency adjustments and hedging
ineffectiveness.
In April, the company predicted a loss of up to 5 cents a
share.
Revenue decreased 15% to $1.35 billion. Analysts polled by
Thomson Reuters most recently were looking for $1.41 billion.
Net yields, or revenue per available passenger cruise days,
decreased 18%, in line with the company's estimates, and would have
fallen 14% on a constant-dollar basis.
Net cruise costs, were down 12%, or 8.5% on a constant currency
basis, and also within expectations.
Based on lower fuel costs, the company said it would increase
its hedges in 2010 to 50%, which is equal to its current hedging
plan for this year, and has hedged about 45% of forecasted 2011
consumption.
For the third quarter, the company expects earnings of 95 cents
to a $1, while analysts were looking for $1.46. The H1N1 virus is
expected to lower earnings by 27 cents this year, with 18 cents
realized in the third quarter.
-By Tess Stynes and John Kell, Dow Jones Newswires;
212-416-2481; tess.stynes@dowjones.com
