Royal Caribbean’s Third-Quarter Earnings Better than Anticipated

Royal Caribbean Cruises beat its Wall Street earnings estimates for the third quarter of 2006 despite an 8 percent decline in profits over the same period in 2005, the company said October 31.

Net income fell to $345.4 million from $374.7 million, a loss RCCL attributed to a one-time gain in third-quarter 2005 of $44.2 million related to the redemption of its investment in First Choice Holidays. Excluding the one-time gain, RCCL said its third-quarter net income improved 12 percent over the same time last year.

In a conference call with analysts, RCCL CEO Richard Fain said that he was pleasantly surprised by strong third-quarter bookings but disappointed by slightly lower fourth-quarter bookings. The cruise lines’ third-quarter revenue increased 6.7 percent to $1.6 billion from $1.5 billion in 2005.

Strong cruise pricing drove net yields to a 2.7 percent increase over 2005 prices. Fuel was once again the culprit of higher net cruise costs, accounting for 3.4 percentage points of the 4.5 percent increase. But for once, the outlook was good, and RCCL said that fourth quarter fuel costs could decrease about $5 million at the current oil prices.

Analysts peppered RCCL executives with questions about its acquisition of Pullmantur, the Spanish cruise line it agreed to buy in September. RCCL said the acquisition would bring down fourth-quarter earnings by two cents to three cents per share.

Mr. Fain added that bookings for 2007 are a mixed bag with the beginning of the year down slightly and bookings beyond the first quarter more robust.