Royal Caribbean Cruises Ltd. (RCL) swung to a fourth-quarter loss as the cruise ship company recorded a massive impairment charge, although net yields–a key industry metric measuring revenue per available cruise day–beat expectations.
For the year, the company projected per-share earnings of $2.30 to $2.50, below recent estimates of analysts polled by Thomson Reuters for $2.67.
Royal Caribbean, whose brands include its namesake line and Celebrity cruises, has seen its North American and Asia markets performing well, although Europe has had larger-than-expected discounting as potential passengers hemmed in bookings because of economic uncertainty and fallout from last year’s deadly wreck of the Costa Concordia, a competitor’s ship, in January. The accident, off the coast of Italy, brought intense scrutiny to the issue of ship safety, and led Royal Caribbean to temporarily suspend almost all of its marketing.
On Monday, the company said it had recorded a total impairment charge of $413.9 million for its Pullmantur brand, of which about $319.2 million relates to goodwill. The remainder is for a valuation allowance for deferred tax assets, a reduction in the value of the trademarks and an impairment charge related to three aircraft that Pullmantur owns and operates.
Royal Caribbean said its 2013 Wave season–the three-month stretch of heavy bookings at the start of a year–is “broadly off to a promising start.” However, it noted that “booking volumes and pricing are down substantially in Spain due to the impact of additional austerity measures there, the lingering impact of the Costa Concordia tragedy and other factors.”
“Excluding the Pullmantur impairment charges, our operating results came in remarkably close to our forecast from a year ago, which is notable given the challenging environment,” Chief Executive Richard D. Fain said. “Looking forward, we see a tale of two continents; North America is doing well, while parts of Europe continue to be a challenge.”
For the quarter, Royal Caribbean reported a loss of $392.8 million, or $1.80 a share, versus a profit of $36.6 million, or 17 cents a share, a year earlier.
In October, Royal Caribbean projected results for the quarter ranging from a per-share loss of two cents to a profit of eight cents a share, well below analyst expectations at the time.
Revenue rose 1.7% to $1.81 billion. Analysts recently expected $1.82 billion.
Net yields were up 1.8% on a constant currency basis versus the company’s guidance of an about 1% increase.
Shares rose 33 cents to $37.12 in recent premarket trading. The stock has risen 20% in the past 12 months.