Soaring Profits and Boosted Forecasts
On Thursday, Royal Caribbean Group raised its annual profit prediction for the third time, citing far higher bookings for the upcoming year than pre-Covid rates. The company’s shares experienced a 3% surge following the announcement. Cruise operators are cashing in on the trend as vacationers are turning towards the affordable appeal of sea-based holidays relative to land-based ones.
Vacationer’s votes for voyages have empowered these firms to ramp up ticket prices, especially in North America and Europe, as the occupancy rates start approximating pre-pandemic counts. Royal Caribbean noted a higher occupancy in Q3 compared to the preceding quarter.
Projections for 2024
“As we peer into 2024, revenues from pre-cruise bookings have more than doubled compared to this year,” proclaimed CEO Jason Liberty during a post-earnings call. He emphasized on strong guest engagement ahead of their cruises and escalating prices. The Royal Caribbean Group now anticipates its annual adjusted profit to range from $6.58 to $6.63 per share, a noticeable leap from the previous prediction of $6.00 to $6.20.
Analyst Brandt Montour from Barclays remarked this report exceeds all expectations. “We cannot identify a single drawback in this report; it has certainly outshone the expected results,” he affirmed.
Factors Affecting Earnings
However, the company also noted a few downsides. Soaring fuel prices and a robust dollar are predicted to dent their full-year earnings by 18 cents per share. Additionally, it warned that the ongoing conflicts in the Middle East could reduce its annual profit by a further 3 cents per share.
Royal Caribbean also projects an adjusted profit between $1.05 and $1.10 per share for Q4, rising above the anticipated $1. The total revenue for the quarter was a staggering $4.16 billion, outperforming the estimated $4.08 billion. Additionally, its adjusted earnings per share of $3.86 also exceeded expectations, according to LSEG data.
Ripples in the Cruise Industry
This news comes on the heels of peer company Carnival narrowing down its yearly loss forecast, despite investors’ growing fears around surging fuel prices. Meanwhile, Norwegian Cruise Line, another competitor, is set to disclose its Q3 results on November 1st. It’s a dynamic, rapidly shifting landscape in the world of cruise ship vacations, and Royal Caribbean sails towards a positive horizon.
