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RCCL exceeds second quarter guidance on strong performance of business

Royal Caribbean Cruises Ltd. (RCCL), the world’s second largest cruise shipping company, has reported second quarter earnings per share (EPS) higher than its April guidance on strong performance of its business, but foreign exchange rates and fuel prices caused concerns.

Adjusted EPS rose to $2.17 from $1.71 in the same period last year and exceeded its own guidance $0.39. 

“Such a high level of favorability is unusual and was driven by a noteworthy confluence of factors including: better than expected revenue from the global brands, better performance from the joint ventures and lower than expected expenses which were driven by timing,” RCCL said in a statement.

Revenues rose to $2.34 billion from $2.20 billion in the second quarter year on, while operating profit increased to $456.9 million from $419.7 million. Net profit rose to $466.3 million from $369.5 million.

In the first six months of the year, revenues increased to $4.37 billion from $4.20 billion and operating profit rose to $731.0 million from $699.2 million. Net profit rose to $684.9 million from $584.3 million.

"While we are frustrated by foreign exchange and fuel rates, we are tickled pink that our business continues to excel and overcome these headwinds," said Richard D. Fain, chairman and CEO, in the statement.  "It is a pleasure to prove, once again, how strong our brands are and to demonstrate continued upside to our yields while maintaining strong expense control."

Gross yields rose up 2.7% in constant currency (up 3.7% as-reported). Net yields were up 2.8% in Constant-Currency (up 3.8% as-reported).

Gross Cruise Costs per Available Passenger Capacity Day (APCD) increased 1.1% in constant currency (up 1.8% As-Reported). Net Cruise Costs (NCC) excluding Fuel per APCD were up 1.1% in constant-currency (up 1.8% as-reported).

The company said it does not forecast fuel prices and its fuel cost calculations are based on current at-the-pump prices, net of hedging impacts. Based on today's fuel prices, the company has included $184 million and $693 million of fuel expense in its third quarter and full year 2018 guidance, respectively.

Forecasted consumption is 50% hedged via swaps for the remainder of 2018 and 52%, 41%, 20% and 5% hedged for 2019, 2020, 2021 and 2022, respectively. For the same five-year period, the average cost per metric ton of the hedge portfolio is approximately $443, $364, $380, $426 and $632, respectively.



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