Bunker Prices and Strong Dollar Hit Royal Caribbean

Royal Caribbean is still on track for its "double-double" strategy, said Fain

Royal Caribbean Cruises Ltd. (Royal Caribbean) Monday said it was reporting stronger than expected results for the first quarter of 2015 (Q1 2015), despite taking a hit from rising bunker prices.

Adjusted Net Income for Q1 was $45.2 million, or around $0.20 per share, compared to $46.1 million for the same quarter last year.

The results are said to out-perform mid-point guidance by approximately $0.08 per share, said Royal Caribbean, despite having taken a $0.05 per share hit due to bunker prices and a stronger U.S. dollar.

The company said rising fuel prices had negatively impacted Q1 results as well as predictions for the full year 2015.

"The strengthening of the US Dollar and the rise in fuel prices are negatively affecting earnings, but cost efficiencies are mitigating a large portion of the impact" said the company.

Royal Caribbean's bunker pricing net of hedging during Q1 was $597 per metric tonne (pmt) and consumed 344,000mt of bunkers in Q1.

It booked fuel costs for the quarter of $205.3 million, down from $244.5 million in Q1 2014, and forecast full year fuel costs at around $834 million.

The company said the relative strength of the U.S. dollar, in which most of its on-board spending is conducted, meant that customers' purchasing power was reduced.

"It is gratifying to post another strong quarter with both revenues and expenses exceeding expectations," said Chairman and CEO Richard Fain.

"Despite ongoing volatility in the currency and fuel markets, our Double-Double program remains solidly on track."

In February, Royal Caribbean reported 40 percent year-on-year earnings growth in 2014, saying "our on-going focus on driving efficiencies throughout the business provides us with the ability to keep our costs firmly in line…while strategically investing in technology enhancements."