Royal Caribbean Bunker Consumption Almost Flat as Earnings Grow 40%

2014 bunker consumption was 1,375,000 mt

Royal Caribbean Cruises Ltd. (RCL) Thursday reported that its 2014 full year bunker consumption was slightly up on 2013 and that savings from a fall in oil prices had been muted in the fourth quarter (4Q14).

Full year bunker consumption for 2014 was 1.367 million metric tonnes (mt) versus 1.3 million mt in 2013, and the company achieved an average 2014 bunker price of $693 per metric tonne (pmt).

In 4Q14, consumption was 347,000 mt, while the average bunker price net of hedging was $660 pmt.

"Even though the worldwide price of crude oil dropped precipitously during the quarter, there is a lag between sharp movements in crude prices and the cost of fuel at-the-pump and bunker inventory on board our ships," said RCL.

However, while bunker consumption was close to flat, it had achieved 40 percent earnings growth in line with its "double-double" growth strategy. 

While spot prices for bunkers have dropped substantially, RCL said much of its forecast consumption was already hedged for next year.

"Forecasted consumption is 52% hedged via swaps for the remainder of 2015 and 50%, 35%, and 15% hedged for 2016, 2017 and 2018, respectively." 

"For the same four years, the average cost per metric ton of the hedge portfolio is approximately $636, $585, $565 and $542, respectively."

The company has new ships coming on line in 2015 and said it still planned to drive cost efficiencies through technological improvements.

"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."

Late last year, RCL was granted an official exemption from new ECA rules by the U.S. Environment Protection Agency (EPA) while it installs scrubbers on its fleet.