Royal Caribbean Beats Profit Expectations


The share price for Royal Caribbean rose yesterday after the company recorded beat profit expectations for the second quarter and reaffirmed guidance for all of 2018. 

Profits rose from US$369.5 million in 2Q last year to US$466.3 million for the same quarter this year.

On the trade side, the "commissions transportation and other" line item climbed from US$340 million for the second quarter of 2017 to US$358 million for Q2 of 2018.

In his statement, Chairman/CEO Richard Fain said, "While we are frustrated by foreign exchange and fuel rates, we are tickled pink that our business continues to excel and overcome these headwinds."

Fain was extremely positive about business trends during the earnings call. He indicated the hurricane impact has dissipated and is pretty much over. Plus, profits are up 26% for Q2 and the outlook was solid.

Yet while RCL stocks were trading up at press-time, the gain was not a big jump. Given the positive vibes, why weren't stocks up more?

Perhaps it's other headwinds not cited by Fain causing investors to be concerned. These include non-company issues such as concerns about a looming international trade war creating uncertainty for those industries that book far ahead. In that vein, the July Consumer Confidence Report indicated that more consumers are now worried that the good economic times will not last.

Fain maintained his optimism. "We're really just seeing both of this year and next year, we're just looking at really strong markets. Our own forecasts are a little more bullish about how that's doing. For third quarter we're coming in a little ahead of where we thought we would be at this time.”

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