Royal Caribbean Cruises Ltd., the world's second largest cruise line, posted a 62 percent jump in first-quarter profit as ticket revenue rose and passengers spent more on drinks, spa treatments and other extras.
The results beat Wall Street expectations and sent shares up 5 percent in premarket trading.
During the same time last year, many vacationers shied away from cruises following the sinking of the Costa Concordia, owned by rival cruise line Carnival Corp. While the cruise line actually saw about 1 percent fewer passengers this year, those who did choose to sail stayed an average of 7 days, a nearly 2 percent increase. They also spent more money.
"It was a gratifying first quarter," Richard D. Fain, chairman and CEO, said in a statement. "Ticket revenues were better than expected, costs were well controlled and it was encouraging to see record guest satisfaction and noticeable improvements in onboard spending as a result of our revitalization efforts."
Net income rose to $76.2 million, or 35 cents per share, from $47 million, or 21 cents per share, a year ago. The result easily beat analysts' forecast of 19 cents per share, according to FactSet.
Revenue rose to $1.91 billion from $1.83 billion, in line with estimates. Ticket revenue climbed 3 percent to $1.4 billion, but sales of onboard add-ons — such as excursions, alcoholic drinks, gambling losses and spa treatments — grew even faster. Those extras brought in $517.4 million, up 7 percent from the same time last year. On the expense side, food costs rose 5 percent to $119.5 million and fuel rose nearly 6 percent to $241.7 million.
Bookings so far this year are up 5 percent. Royal Caribbean says bookings from North America remain strong except for a bit of a drop in Caribbean demand, which it links to bad press from problems with Carnival ships. Demand from European vacationers strengthened in early February and the company expects to be able to charge higher prices from the region for the year. Demand from China has weakened somewhat due to itinerary changes related to a territorial dispute with Japan.
The Miami company backed its forecast for the rest of the year, with second-quarter earnings expected to range between 10 cents and 15 cents per share, and full-year earnings expected between $2.30 and $2.50 per share.
On average, analysts have forecast earnings of 19 cents per share for the current quarter and $2.44 per share for the full year.