The central theses
- Royal Caribbean missed its profit and sales forecasts.
- The company did not report its occupancy, a measure of the available passenger capacity or the cabins used.
- Royal Caribbean expects to have 80% of its capacity back in service by the end of 2021.
|Royal Caribbean Winning Results|
|Metric||Beat / Miss / Match||Reported value||Analysts’ forecasts|
|Adjusted EPS||Fail||– $ 5.06||$ -4.34|
|revenue||Fail||$ 50.9 million||$ 149.5 million|
|Occupancy rate||N / A||Not reported||49.0%|
Source: Predictions based on analyst consensus from Visible alpha
Royal Caribbean (RCL) Financial Results: Analysis
Royal Caribbean Group (RCL) reported Result Q2 FY 2021 that fell short of analysts’ expectations. The company posted higher adjusted loss per share than analysts expected. It was the sixth straight quarter with adjusted losses per share. Revenue for the quarter fell well below analyst estimates and slumped 71.0% year over year (YY). Unlike in the first quarter, Royal Caribbean did not announce its occupancy in its press release on the results for the second quarter. The company’s shares were relatively unchanged in pre-market trading. Last year, Royal Caribbean shares did one Total return of 57.2%, above the S&P 500’s total return of 34.3%.
RCL occupancy rate
While Royal Caribbean didn’t provide data on occupancy for the final quarter, the rate was 37.7% in the first quarter, well below the 103.0% in the first quarter of FY2020. Analysts had expected the occupancy rate for the last quarter to be 49.0%.
Royal Caribbean Occupancy, simply referred to as “Occupancy”, is calculated by multiplying the number of passengers carried during the measurement period by the number of days of the passengers’ respective cruises and then dividing by the available passenger capacity as measured by the available Passenger Cruise Days (APCD). The capacity dimension assumes double occupancy per cabin, which is why occupancy rates of more than 100% are possible – sometimes cabins are occupied by more than two passengers.
The outbreak of the COVID-19 pandemic last year nearly brought the cruise industry to a standstill. The number of passengers taking cruise trips fell dramatically, but so did the available capacity of the cruise lines. For example, Royal Caribbean was able to maintain a relatively high occupancy rate on board its ships despite the sharp decline in passengers. However, with cruise operations resuming this year, consumer demand appears to be lagging behind the company’s provisioned capacity. Royal Caribbean expects to have 80% of its capacity in operation by the end of 2021.
Royal Caribbean found that it received about 50% more new bookings in the second quarter compared to the first quarter. At the end of the second quarter, the company had approximately $ 2.4 billion in customer deposits, an increase of $ 530 million from the end of the first quarter. One of the biggest risks for the future is the faster spreading delta variant of the coronavirus.
Royal Caribbean said that due to the significant impact of the pandemic, it could not make reasonable estimates of future financial or operating results. However, a net loss is expected for the third quarter and for the entire 2021 financial year. Royal Caribbean’s next earnings report (for Q3 FY 2021) is expected to be released on October 22, 2021.