Royal Caribbean (RCL.US) Q2 Profit Surpasses Expectations and Raises Full-Year Guidance, but Revenue Falls Short
CNA Finance APP learned that Royal Caribbean Cruises Ltd. (RCL.US) announced its second-quarter earnings report on Tuesday, despite revenue slightly below market expectations, profit performance was strong, and raised full-year guidance. The report showed that the company's adjusted earnings per share for the quarter reached $4.38, exceeding analysts' expectations of $4.08; revenue grew 45.4 billion dollars year-over-year, although slightly lower than the average forecast of 45.5 billion dollars by market analysts. This quarter, the number of passengers received was 2.3 million, a 10% increase compared to the same period last year, with an occupancy rate of 110%, showing continued improvement in operating efficiency.
Despite geopolitical risks and trade policy changes bringing cost pressures, Royal Caribbean still raised its guidance for full-year adjusted earnings per share to $15.41-$15.55, which was previously expected by analysts at an average of $15.45. The company said that this adjustment was mainly based on the company's strong performance in the second quarter, effective cost control, and continued confidence in its profitability capabilities. The report also revealed that the net profit rate for the second quarter increased 5.3% year-over-year, benefiting from new ship deliveries, upgrades to existing fleets, and double growth in ticket prices and onboard consumption, with a capacity scale increasing by 5.8%.
However, the recent escalation of tensions between Israel and Iran, combined with the latest trade agreement between the United States and the European Union, has led to a surge in fuel costs and uncertainty for the cruise industry. Royal Caribbean expects its adjusted earnings per share for the third quarter to be $5.55-$5.65, with a net profit rate increasing 2.3%-2.8% year-over-year, although this guidance is lower than analysts' previous expectations. The company also warned that operating costs will rise by approximately 230 basis points year-over-year in the third quarter, mainly due to the adjustment of the delivery schedule for the luxury cruise ship "Ocean Star" and the delayed payment of some second-quarter expenses.
Despite facing macroeconomic challenges, Royal Caribbean's booking trend is still showing a positive attitude. The demand for near-distance routes has increased year-over-year, with exclusive discounts and limited-time promotions effectively attracting guests. The company is developing private island resort projects and innovative route designs to continuously expand its high-end customer base and new markets. CEO Jason Liberty emphasized: "The strong demand for new ship deliveries and land-based destination development confirms that the company's strategy aligns with contemporary travelers' preferences."
After the report was released, Royal Caribbean's stock price fell by more than 6% in pre-market trading, despite the fact that the company's profit performance surpassed expectations, raised its full-year guidance, and investors still chose to "vote with their feet". The reason for this is likely due to the "perfectionism" expectation of profit. In reality, except for revenue slightly below expectations, Royal Caribbean's report was largely flawless, but some funds took advantage of the situation to lock in profits, which is also reasonable. As of Monday's close, Royal Caribbean's year-to-date cumulative return rose by 53%, fully benefiting from signals of U.S. economic resilience. By comparison, rival Carnival Corporation (CCL.US) only rose by 19%, while Norwegian Cruise Line Holdings (NCLH.US) even fell by 7.2%, with significant differentiation.