Royal Caribbean may be ready to build new cruise ship

In a conference call with investors today, Royal Caribbean Chariman and CEO Richard Fain said that the company may be ready to look to building a new cruise ship.

“We feel time may now be right for such a move,” he said.  The new ship would be a new class of ship, not another Oasis class ship .

There’s no timetable yet for placing an order. Meantime, said Mr.Fain, in the short term Royal Caribbean is focusing on enhancing current ships through what he called “Oasisizing” — rolling out features from Oasis and Allure of the Seas  to older ships.

In a Q&A session, Mr. Fain said the company would remain tight lipped about the new ship, but said it would be a Royal Caribbean brand ship and would likely start with one ship.

Fourth Quarter 2010 Results

Royal Caribbean Cruises Ltd. today announced net income for the fourth quarter 2010 of $42.7 million, or $0.20 per share, compared to net income of $3.4 million, or $0.02 per share, in the fourth quarter of 2009.

Revenues improved to $1.6 billion in the fourth quarter of 2010 compared to $1.5 billion in the fourth quarter of 2009 as a result of capacity increases and yield improvements. Net Yields for the fourth quarter of 2010 increased 3.2% (4.2% on a Constant Currency basis). During this last quarter, extreme weather conditions impacted some voyages and some guests’ ability to make their departures. Royal Caribbean says that without these weather disruptions, Net Yields on a Constant Currency basis would have increased 4.7%, in line with previous guidance.

Royal Caribbean says its energy consumption efforts were also better than previous guidance with usage of 344,000 metric tons during the fourth quarter. At-the-pump pricing (including the benefit of the company’s hedging program) was in line with earlier calculations at $474 per metric ton. Taken together, the quarter’s fuel expenditures were approximately $4 million better than previous calculations.

Full Year 2010 Results

Net income for the full year 2010 was $547.5 million, or $2.51 per share, compared to net income of $162.4 million, or $0.75 per share, for the full year 2009. Revenues for the full year 2010 increased 15% to $6.8 billion from revenues of $5.9 billion for the full year 2009. Net cruise costs excluding fuel declined for the third year in a row and were down 1.6%. Despite significant market price increases, fuel costs per metric ton increased only 1% to $493 as a result of the company’s hedging program. Since 2005, the company has reduced energy consumption per APCD by 15% and full year 2010 consumption was 1,311,000 metric tons.

2011 Outlook

“WAVE is off to a solid start and supports our earlier confidence in meaningful pricing recovery and record financial performance in 2011,” said Mr. Fain, The WAVE season is the January-February period during which cruise lines receive their most forward bookings and is generally seen as a good predictor for industry full-year performance.

Early “WAVE season” bookings have been encouraging and booked load factors and average per diems are ahead of same time last year. On an as reported basis, the company expects net yields to increase between 4% and 6% for the full year and 2% to 3% for the first quarter of 2011. On a Constant Currency basis, Net Yields are forecasted to be up between 4% and 5% for the full year and to increase 1% to 2% in the first quarter of 2011.

On a Constant Currency basis, NCC excluding fuel are forecasted to be up 1% to 2% for the full year and the first quarter of 2011. On an as reported basis, NCC excluding fuel are expected to be up approximately 2% for the full year and the first quarter of 2011.

Based upon the above and current fuel prices and currency exchange rates, the company expects full year EPS will be between $3.25 and $3.45 per share.

January 27, 2011