Royal Caribbean Cruises Ltd (RCCL), the world’s second largest cruise shipping group, has booked a $400 million impairment charge against the assets and brand name of Pullmantur, its Spain and Latin America focused brand.
“The Company conducts an analysis of the carrying value of its assets on a regular basis. In past quarters, management has acknowledged the weakness in the economies of Latin America, and the impact of this weakness on Pullmantur. Unfortunately, the economic outlook in Latin America has deteriorated further in recent months and, as a result, the brand is re-focusing on its core market of Spain. These factors triggered the company to record a non-cash impairment charge of $399.3 million, primarily related to its goodwill, its trademark and trade names and a reduction in the carrying value of select vessels in the Pullmantur fleet,” the company said in a statement, it said, adding that this eliminates all intangibles at Pullmantur.
“As the company right-sizes the brand, restructuring and related charges of approximately $5 to $10 million associated with the new strategy will be booked in future quarters. In addition, as previously anticipated, we will be eliminating the two-month reporting lag for the Pullmantur brand,” RCCL said.
This will start in the first quarter of 2016, and is expected to be immaterial to the company's results. All the adjustments will be excluded from our key metrics for transparency and comparability purposes. "The right-sizing of the Pullmantur fleet will better balance supply with demand for the brand in the Spanish market," said Richard D. Fain, chairman and chief executive officer. "These changes should put Pullmantur on a more successful course for the future."
