Royal Caribbean posts a loss
The cruise company struggles to come back from the Costa Concordia crash. The economic downturn in Europe isn't helping either.
Royal Caribbean (RCL) reported a loss in its second quarter, hurt by the economic turmoil in Europe and a broad industry downturn after the Costa Concordia disaster in January.
The cruise line company reported a loss of $3.6 million, or 2 cents per share, a steep drop from net income of $93.5 million, or 43 cents per share, a year earlier. Revenue rose 3% to $1.82 billion. The numbers missed the analyst consensus of 3 cents per share in profit on revenue of $1.84 billion.
Royal Caribbean also cut its guidance for the current quarter, and said it expected net yields to decrease about 5% on an as-reported basis. The quarterly results also included a 5 cent per-share mark-to-market loss on the company's fuel option portfolio.
"The steady drumbeat of negative news emanating out of Europe is certainly having an impact," CEO Richard Fain said in a statement. "As a result, we are seeing pluses and minuses in the different geographical markets -- North America is holding up reasonably well; Asia is a big plus; but Europe is a pretty consistent minus.
But Royal Caribbean's chief financial officer, Brian Rice, said in a statement that it was hard to know if the crash was still affecting his company's financial situation. The peak booking period was severely impacted by the news.
"It is hard to distinguish how much of the pressure in Europe is connected to the Costa Concordia incident and how much is due to the economic roller coaster," said Rice said. "Our sense is that the former is no longer having a major impact on our bookings especially amongst experienced guests. However, the timing of the incident left a big gap during our peak booking period and filling that gap is disrupting our normal booking patterns."
Research firms reacted Thursday to the lower yield assumptions made by Royal Caribbean management. SEB Enskilda intends to cut 2012-13 earnings per share by 15%, while Terra noted that it is likely to lower estimates and target price for the share as well.
Royal Caribbean has certainly taken undeserved heat for a crash its cruise line did not cause.
The stock recovered from losses earlier Thursday to head into the close up 1.4% to $24.65. Meanwhile, Carnival was up 1% to $32.75.
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