RCCL reports fall in third quarter, nine month profit on Pullmantur charge

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 23 October 2015 23 October 2015

Royal Caribbean Cruises, Ltd (RCCL), the world’s second largest cruise shipping group, has reported a fall in third quarter and nine months net result on a heavy impairment charge of its Pullmantur brand.

Group net profit fell to $228.8 million in third quarter to $490.2 million, while revenues rose to $2.52 billion from $2.38 billion. The company booked impairment charges of $399.3 million related to Pullmantur, its Spain and Latin America focused brand and its assets.

In the first nine months of the year, the profit fell to $458.9 million from $654.4 million, while revenues rose to $6.39 billion from $6.26 billion.

“Net Yields on a Constant-Currency basis increased 5.1% during the quarter, approximately 130 basis points better than the mid-point of previous guidance. Close-in Caribbean and European demand and strong performance in Asia more than off-set further weakness in Latin America,” the company said in a statement.

“Onboard Revenue Yield increased 10% mainly driven by strong retail and beverage sales and demand for VOOM, the fastest internet at sea,” RCCL said. Year-over-year, the company has made a number of structural changes which are driving a stronger fourth quarter. The growth of the Asia-Pacific region, including Quantum of the Seas sailing in China, boosts earnings in the typically lighter shoulder season.

The addition of new capacity, with Anthem of the Seas joining the fleet, efforts to drive incremental Onboard Revenue, and a continued focus on cost efficiencies also contribute to a stronger end of the year.

RCCL books $400 million impairment charge against Pullmantur and its fleet

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 23 October 2015 23 October 2015

Royal Caribbean Cruises Ltd (RCCL), the world’s second largest cruise shipping group, has booked a $400 million impairment charge against the assets and brand name of Pullmantur, its Spain and Latin America focused brand.

“The Company conducts an analysis of the carrying value of its assets on a regular basis. In past quarters, management has acknowledged the weakness in the economies of Latin America, and the impact of this weakness on Pullmantur. Unfortunately, the economic outlook in Latin America has deteriorated further in recent months and, as a result, the brand is re-focusing on its core market of Spain. These factors triggered the company to record a non-cash impairment charge of $399.3 million, primarily related to its goodwill, its trademark and trade names and a reduction in the carrying value of select vessels in the Pullmantur fleet,” the company said in a statement, it said, adding that this eliminates all intangibles at Pullmantur.

 “As the company right-sizes the brand, restructuring and related charges of approximately $5 to $10 million associated with the new strategy will be booked in future quarters. In addition, as previously anticipated, we will be eliminating the two-month reporting lag for the Pullmantur brand,” RCCL said.

This will start in the first quarter of 2016, and is expected to be immaterial to the company's results. All the adjustments will be excluded from our key metrics for transparency and comparability purposes. "The right-sizing of the Pullmantur fleet will better balance supply with demand for the brand in the Spanish market," said Richard D. Fain, chairman and chief executive officer. "These changes should put Pullmantur on a more successful course for the future."