Royal Caribbean Results "Better Than Expected"

The company is in negotiations for a new Oasis class ship

Royal Caribbean Cruises Ltd. (Royal Caribbean) said its third-quarter results were "better than expected" despite being down from the same quarter last year.

The company had profits of $367.8 million on revenues of $2.2 billion for the quarter, down from $399.0 million in profits and $2.3 billion in revenues in Q3 2011.

"The strong third quarter certainly validates our confidence in our business model," said Richard D. Fain, chairman and chief executive officer. 

"Strong close-in demand and our focus on costs drove substantially better results than expected. 

"I am especially gratified that we are still seeing price increases in a year marked by so many external pressures."

The company's fuel costs for the quarter totaled $213 million, up from $202 million, and its bunker pricing net of hedging for the third quarter was $639 per metric tonne (pmt), while consumption was 334,200 metric tonnes. 

Royal Caribbean said January's sinking of the Costa Concordia in Italy had an impact on bookings for the second and third quarters of the year, but it is declining in the fourth quarter.

In the forth Quarter, Royal Caribbean said they were expecting to consume 344,000 metric tonnes of fuel at a cost of $229 million, or $665.70 pmt, and with 58 percent of that volume having been hedged, a 10 percent change in fuel prices would only translate into a dollar change of $9 million.

The company increased its guidance for full year earnings by 15 cents per share to a range of $1.85 to $1.95 per share due to stronger than anticipated revenue, expense reduction, and currency benefits net of oil price increases.

Royal Caribbean, which operates 39 ships and is the second-largest cruise company, according to its 2012 Annual Meeting presentation, is in negotiations for the construction of a new Oasis class ship to be delivered in 2016.