Royal Caribbean Cruises revealed an outlook for the year that would beat the goals of its Double-Double programme aimed at boosting profitability at the Miami giant.
The world's second largest cruiseship owner said Thursday that it now expects to earn $6.90 to $7.10 in adjusted earnings per share in 2017, which marks the final lap in the initiative.
The programme aims to deliver adjusted EPS of at least $6.78 this year, which would double the figure posted in 2014. The effort also targets a double-digit return on invested capital.
"As we enter our Double-Double year, we have never been so well positioned," said Richard Fain, Royal Caribbean's chief executive.
"This programme has done what it set out to do – bookings are at record levels, the preference our brands enjoy has never been stronger, we are on the cusp of investment grade ratings, our dividends are at an all-time high, costs have been well managed, and our guests' satisfaction has never been better."
UBS analyst Robin Farley said Royal Caribbean's guidance is better than Wall Street's average outlook for $6.80 in adjusted EPS in 2017.
The company's forecast calling for 4% to 5% in yield growth this year means Royal Caribbean "has given its highest yield outlook in at least 10 years," she said.
The company's shares surged after the report, rising 7.4% to $94.15 in morning trading on the New York Stock Exchange. That added $1.39bn to market capitalisation.
Quarterly earnings top estimates
Royal Caribbean unveiled the new outlook as it reported better-than-expected fourth-quarter profit of $261m, a 26.3% improvement on the same quarter of the prior year.
With items not factored into analyst estimates stripped out, the company delivered adjusted EPS of $1.23, slightly ahead of the $1.21 average analyst estimate as calculated by Yahoo Finance.
The result comes at a time when the cruise market appears to be cooperating with the major operators' focus on profitability, with Royal Caribbean echoing the strong booking trends described bylarger rival Carnival in its December earnings report.
Royal Caribbean launched its Double-Double programme in 2014 in an effort to aggressively boost earnings.
2017 guidance
| Net yield growth, constant currency basis | 4%-6% |
| Net cruise cost per available passenger cruise day | Flat |
| Capacity growth (decline) | (1.7%) |
| Depreciation and amortisation | $935m-$945m |
| Net interest expense | $280m-$290m |
| Adjusted EPS | $6.90-$7.10 |
"The Double-Double programme helped reinforce the mindset and discipline across our organisation which has gotten us here," said Fain. "While currency and fuel are both significant negatives at the moment, our business continues to thrive."
The latest quarter's result helped push full-year profit to $1.28bn, an improvement on 2005's $666m.
If Royal Caribbean repeats the growth as anticipated, it will mark the fifth-straight year of earnings improvement, the company said.
