Royal Caribbean Profit Forecast Raised

Royal Caribbean Cruise Lines has reported that stable bookings and more control over costs have enabled them to reach better-than-expected results for the second quarter. This sent the company’s shares jumping as much as 10.5% while they boosted their earnings forecast for 2010.

Net income for the quarter was US$60.5 million, which is the same as $0.28 per share, while analysts predicted only $0.18 per share on average. Operating revenue also increased from $1.3 billion to $1.6 billion. This came as net cruise costs declined 2.8%, which was better than the predicted 1% increase. The control over costs was helped by measures taken to conserve energy, the fluctuation of currency and expense timing.

The dollar was strong against other currencies and cost Royal Caribbean about $0.02 per share. However, although the dollar hurt revenue, it also helped ease expenses. About 30% of the revenues for the company are denominated in currencies other than the US dollar – most notably the Canadian dollar, British pound and euro.

Despite this, Royal Caribbean said that their focus on cutting costs and a stable revenue environment have allowed them to boost their outlook on full-year earnings. They now predict earnings to be between $2.25 and $2.35 per share for the year, but analysts project only $1.91 per share. For the third quarter, the company believes earnings will be between $1.52 and $1.57 per share, while analysts predict $1.51 per share.

Richard Fain, the chief executive, said that the company has always assumed that this year’s economic environment would still be very hard, and they never expected such big improvements, which have driven their results. Chief financial officer Brian Rice said that they have seen a steady expansion in bookings since the start of the year, and now they are very close to the same levels as before the recession.