Insights

Earning Analysis: ROYAL CARIBBEAN CRUISES

The world’s second largest cruise company,
Royal Caribbean Cruises (NYSE: RCL) announced its earnings for the 2018 financial year. The company listed on the
U.S. Nasdaq in 1993, with a long business history dating back to 1968.

Royal Caribbean Cruises controls and operates four global cruise brands: Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises and Silversea Cruises. Besides those brands, the company also owns a 50% joint venture interest in the German brand TUI Cruises and a 49% interest in the Spanish brand Pullmantur. Altogether, RCL operate about 60 ships in total.

Royal Caribbean Cruises has developed partnerships with local companies in Europe, Asia, Australia, New Zealand and Mexico, and plans to extend its geographic reach with a network of approximately 76 independent international representatives located throughout the world covering more than 180 countries.

Business has been steady with increasing revenues as well as operating income over years. In particular, the operating margin has increased from 11% in 2015 to 20% in 2018.

The company reached $9,494 million of revenue in FY 2018, and the management said the result was achieved despite the unfavorable impact from currency and fuel costs which effected earnings by about $123 million. Passenger ticket sales revenues accounted for approximately 72% of total revenues in 2018, 2017 and 2016.

The cruise vacation industry has been booming especially in North America, and this has contributed to strong growth in the company’s North American brands. At the same time, international guests have grown from approximately 2.2 million in 2014 to approximately 2.3 million in 2018.

As the number of passengers carried is increasing year by year, total passenger cruise days are also increasing.

Average per passenger onboard days stayed around 7 days from 2010 to 2018, while occupancy keeps on rising to 109% in FY 2018.

Royal Caribbean has benefited from increasing travel bookings and the management forecast strong demand trends for 2019. The company plans add 16 more cruise ships by 2026, adding about 50,000 more potential guests each year.

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The original article was published by Stockclip, Inc. on 12/03/2019.

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