Royal Caribbean profits fall 65% for first Quarter

[dz9yvr]

Other items of note from the 1st quarter financials:

 

1) Six voyages were shortened or cancelled during the quarter. The net impact from these events is expected to be recovered within the fiscal year. These disruptions adversely affected net revenues for the quarter due to refunds and future cruise credits.

 

2) Operating costs (excluding fuel) were up 1.3% over the comparable period for the prior year. These increases were pretty much across the board....except for food costs. Food expense actually decreased from $119.5 million for the first quarter of 2013 to $118.1 million for the first quarter of 2014.

 

3) Ticket revenue was in line with expectations across most key itineraries and as expected, Caribbean yields were down slightly while yields in other itineraries were up nicely.

 

4) On-board revenue yields increased 3.4% as the company continued to see the benefit of our fleet upgrades and onboard revenue management initiatives.

 

5) The number of passengers carried during the 1st quarter of 2014 was 1,278,234 compared to the 1,261,292 that were carried during the 1st quarter of 2013.

 

6) Average occupancy fell from 104.9% for 1st quarter 2013 to 104.5% for 1st quarter 2014.

 

 

So if RCL had 1,278,234 passengers (1.2 Million) And the profit was $26 million, RCL only makes about $23 profit per passenger on each cruise. This seems a little low to me. I think everyone can now understand why thinks like eliminating mints and towel animals make a big impact on the profit.

[Ourusualbeach]

So if RCL had 1,278,234 passengers (1.2 Million) And the profit was $26 million, RCL only makes about $23 profit per passenger on each cruise. This seems a little low to me. I think everyone can now understand why thinks like eliminating mints and towel animals make a big impact on the profit.

 

While I agree that the little things do add up it is not as bleak of a picture as it looks.

 

That $26 million was low because of a couple of extraordinary items and the fact that Q1 is typically one of the lowest revenue/ profit quarters.

 

The EPS for Q1 was 12 cents per share. The outlook for all of 2014 was revised upwards to $3.25 to $3.45 per share.

[BecciBoo]

Did anybody ever think a faltering economy has something to do with it???

 

I mean compare their results with a hundred other companies who results have fallen this year. Hello....people aren't cruising because they no longer want to, they can't afford to...trickle down....

 

Shish, my food bill is soaring..,.higher prices every day.....

 

This too shall pass....exactly like it has since we first started cruising. Seems like I read one of these performance threads every year. Like 2007 when the company was predicted to go broke with the entrance of Oasis class,....I guess they proved those naysayers wrong.....

[A&L_Ont]

I think everyone can now understand why thinks like eliminating mints and towel animals make a big impact on the profit.

 

They should save that money to buy limes. :D

Edited April 26, 2014 by A&L_Ont

[CRUISEFAN0001]

As an observation...

 

A 65% drop in one quarter would appear to be a significant concern, especially to the shareholders.

 

On the other hand, there is typically more than meets the eye on a quarterly financial snapshot.

 

Still - that's not good news in any context.

[undertheradar]

As an observation...

 

A 65% drop in one quarter would appear to be a significant concern, especially to the shareholders.

 

On the other hand, there is typically more than meets the eye on a quarterly financial snapshot.

 

Still - that's not good news in any context.

 

Shareholder here. Apparently, not that that big of a deal. The stock price went down, but no more than normal daily price changes. No concern here.

[dz9yvr]

While I agree that the little things do add up it is not as bleak of a picture as it looks.

 

That $26 million was low because of a couple of extraordinary items and the fact that Q1 is typically one of the lowest revenue/ profit quarters.

 

The EPS for Q1 was 12 cents per share. The outlook for all of 2014 was revised upwards to $3.25 to $3.45 per share.

 

 

I guess I'm not so sure this news isn't bleak. Even if the profits were doubled to $46/passenger that doesn't seem all that good. Assuming that Oasis and Allure are making a lot more money, it makes me wonder if some of the older ships operate at a loss.

[Ourusualbeach]

I guess I'm not so sure this news isn't bleak. Even if the profits were doubled to $46/passenger that doesn't seem all that good. Assuming that Oasis and Allure are making a lot more money, it makes me wonder if some of the older ships operate at a loss.

 

You can't just look at one quarter by itself. Taking earnings per share from $.12 to $3.40 is more than doubling profits.

 

Last year RCCL had profits of approximately $473 million and carried passengers totalling almost 4.9 million. That equates to profits per passenger of almost $97.00.

 

Last years EPS was 2.16 while this years EPS is projected to be Appx 3.40 which is an increase of almost 50% so unless the shares have been diluted then the average profit per passenger would increase this year to about $150

 

Don't forget that these numbers are for RCCL and not just RCI. They include Celebrity, Azamara, Pulmanteur, and a couple of others. There is no breakdown of just RCI.

 

As someone else mentioned the stock stayed very stable the day that the Q1 results were released so obviously the markets were not discouraged or nervous about the results and RCCL continues to trade very near its 52 week high and up substantially over the past year.

[nolesrule]

Let's also take a look at historical profit margins by quarter. RCCL makes most of their profits in Q3.

 

http://ycharts.com/companies/RCL/profit_margin

 

Considering they had to cancel an Allure sailing, had the Explorer noro incident, et al., it's really not all that bad.

 

Sent from my Samsung Galaxy S4

[Ourusualbeach]

How and when does RCI even book their revenues for reservations? Is it based on initial reservation dates? Payment dates? When the ships sail?

 

After the ship has returned from the trip. On cruises over 14 days it is pro rated.

 

Until the ship sails it is actually a liability on the balance sheet.

Edited April 27, 2014 by Ourusualbeach

[The Big Booper]

Also, RCCL wrote off part of their ill-fated investment in Pullmantur, the non-cruising business.

 

As others have said, the 1Q is always a slow period and sometimes the lines give away the ships just to get bodies on board for some on-board spending and tip money. I believe that the line has to make up part or all of the tip money to cabin attendants for empty cabins.

 

Also, many costs are fixed such as financing costs on all the new builds and early years depreciation charges on the new builds. I am sure the internal financial analysts know the fixed and variable components of the cost structure, we don't and can only guess. And RCCL does not provide a breakdown by operating units (ie. the different cruise brands) they operate.

 

We do know that Allure and Oasis are pure money machines for the company just based on operating results but also have very high financing costs and depreciation charges.

 

It would be interesting if the company would release operating results for each ship and line but there is no chance they would do that, ever.:eek::eek:

[rcclfanbp]

Let's also take a look at historical profit margins by quarter. RCCL makes most of their profits in Q3.

 

http://ycharts.com/companies/RCL/profit_margin

 

Considering they had to cancel an Allure sailing, had the Explorer noro incident, et al., it's really not all that bad.

 

Sent from my Samsung Galaxy S4

 

Interesting chart (especially the big decrease for 4th Qtr 2013 when no double Dec. points were awarded).

 

Thank you for posting.

[Ourusualbeach]

Interesting chart (especially the big decrease for 4th Qtr 2013 when no double Dec. points were awarded).

 

Thank you for posting.

 

That decrease was for the last quarter of 2012 which was due to a $385 million write down of Pulmantur assets.

 

Regarding Diamonds in December not running that was December of 2013 and if you compare revenue and passenger counts for 2013 and 2012 you will find that RCCL carried more passengers and had higher revenue in 2013. We have no way of knowing if this is reflected in the actual numbers for RCI as they do not report the brands separately but RCI does carry Appx 75% of the total passengers of RCCL.

[nolesrule]

I have to say that after the way this thread started, I'm liking that it has actually become a discussion of facts.

[cruzfitter]

I have to say that after the way this thread started, I'm liking that it has actually become a discussion of facts.

 

A good site to follow for an overview of the cruising market is http://www.cruisemarketwatch.com. The site is partially down for maintenance today, but when the inter-active part is working, it will give a breakdown of general financials of individual cruise lines inside the corporate umbrellas of CCL and RCL as well as other cruise lines.