Royal Caribbean 4th-qtr profit more than doubles, beating forecasts, as cost cutting continues

Royal Caribbean earns $3.4 million in 4Q

CHICAGO — Royal Caribbean’s passengers spent more than expected during the fourth quarter and the cruise company carefully controlled its expenses, helping it more than double its fourth-quarter profit compared with a year earlier.

And a month after launching the world’s largest cruise ship, the 6,300-passenger Oasis of the Seas, executives said Thursday they expect business to keep improving in 2010.

“It was a painful year, but we still managed to suffer less revenue declines than most comparable industries, despite the double whammy of the economy and swine flu,” Chairman and CEO Richard D. Fain said of 2009 on a conference call with investors. “And (2010) is looking much stronger than many thought possible just a short time ago.”

For the three months that ended Dec. 31, the owner of Royal Caribbean International, Celebrity Cruises and Pullmantur earned $3.4 million, or 2 cents per share. That’s more than double what it earned in traditionally slow quarter a year earlier — $1.5 million, or a penny per share.

Royal Caribbean Cruises Ltd.’s fourth-quarter profit also soundly beat its forecasts and those of Wall Street analysts, who expected it to report a loss.

Cruise net costs — the amount of money it costs to operate a cruise excluding certain expenses — fell nearly 9 percent during the period.

Revenue was nearly steady at $1.45 billion for the quarter, down from $1.46 billion last year.

Analysts surveyed by Thomson Reuters expected Royal Caribbean to lose 6 cents per share on revenue of $1.44 billion. Those estimates typically exclude one-time items, and the company didn’t record any in the fourth quarter.

Full-year results were less rosy, however: The company’s annual profit plummeted almost 72 percent to $162.4 million, or 75 cents per share. That’s down from a 2008 profit of $573.7 million, or $2.68 per share. Full-year revenue fell 10 percent to $5.89 billion from $6.53 billion.

But after spending much of the year slashing ticket prices to try to woo budget conscious travelers back onboard its ships, the company said it was beginning to raise those prices again, but they remain below last year’s.

“Since we lapped the beginning of the recession back in September, we are experiencing clear signs of recovery in the order books,” Chief Financial Officer Brian Rice said.

Bernstein analyst Janet Brashear told investors the report shows signs of progress, especially as the industry begins its important “wave season” — a period from January through March when most reservations are made. Royal Caribbean said new reservations are about 30 percent higher this year than the same time one year ago.

“The booking trend is encouraging, which bodes well for the critical wave season,” Brashear wrote in a research note to investors. “While not back to pre-recession levels, the comparisons to last year have been improving steadily since September.”

Also good news: the Miami company issued a brighter full-year profit forecast than expected. It estimated it will earn between 25 and 30 cents per share during the first quarter and an annual profit between $2 and $2.20 per share. The first quarter will include a one-time gain of 39 cents per share.

Analysts surveyed by Thomson Reuters expect the Miami company to earn 3 cents per share in the first quarter and $1.48 per share for the full year. Those estimates typically exclude one-time items.

Royal Caribbean shares climbed 54 cents, or 2.1 percent, to $25.97 in midday trading Thursday.