Royal Caribbean Cruises Ltd. reported better than expected third quarter results and increased its earnings outlook for full year 2012.

“The strong third quarter certainly validates our confidence in our business model,” said Richard D. Fain, chairman and chief executive officer. “Strong close-in demand and our focus on costs drove substantially better results than expected. I am especially gratified that we are still seeing price increases in a year marked by so many external pressures,” Fain continued.

Third Quarter 2012 Results
Royal Caribbean Cruises Ltd. today announced third quarter 2012 net income of $367.8 million, or $1.68 per share, versus income of $399.0 million, or $1.82 per share, in the third quarter of 2011.

Close-in bookings for the third quarter across most itineraries — including Europe — were stronger than anticipated, resulting in a Net Yield increase of 0.1% on a Constant-Currency basis.  NCC excluding fuel were also better than anticipated and increased 2.0% on a Constant-Currency basis (declined 0.2% As-Reported).  Approximately 200 basis points of the Net Yield improvement and approximately 220 basis points of the NCC excluding fuel increases during the quarter relate to previously announced deployment initiatives and changes to the company’s international distribution system.

Bunker pricing net of hedging for the third quarter was $639 per metric ton and consumption was 334,200 metric tons.

Outlook

Fourth Quarter 2012
As the company anticipated in February, the tragedy in Italy had its biggest yield impact in the second and third quarters of the year.  The effect of the incident on bookings has continued to wane and fourth quarter 2012 Net Yields are expected to increase approximately 1% on both Constant-Currency and As-Reported bases.  Excluding previously referenced deployment initiatives and changes to the company’s international distribution system, Net Yields for the quarter are expected to be approximately flat.

For the fourth quarter of 2012, NCC excluding fuel are expected to be up approximately 1% on a Constant-Currency basis and flat to up 1% on an As-Reported basis.  Excluding the deployment initiatives and changes to the company’s international distribution system, NCC excluding fuel are expected to be approximately flat on both a Constant-Currency and As-Reported basis.

Full Year 2012
The company increased its guidance for full year earnings per share by $0.15 to a range of $1.85 to $1.95. This increase has been mainly driven by stronger than anticipated revenue (+$0.06 per share) and expense reduction (+$0.06 per share).  The remaining $0.03 per share improvement is principally due to currency benefits net of oil price increases.

For the full year of 2012, Net Yields are expected to increase approximately 3% on a Constant-Currency basis and to be up  1% to 2% on an As-Reported basis.  Approximately 200-250 basis points of the expected improvement in Net Yields relates to deployment initiatives and changes to the company’s international distribution system.

For the full year, NCC excluding fuel are expected to increase approximately 4% on a Constant-Currency basis (up 2% to 3% As-Reported).  Excluding deployment initiatives and changes to the company’s distribution system, Constant-Currency NCC excluding fuel are expected to be flat to up 1%.

Capacity Additions
The company noted that it is engaged in negotiations for the possible construction of an Oasis-type newbuild that would be delivered in middle to late 2016.  While the company has not entered into any agreement at this time, it hopes to do so before year’s end.  The new ship is expected to cost less on a per berth basis than either of the first two Oasis-class vessels.

“The Oasis of the Seas and Allure of the Seas have proven themselves to be exceptionally attractive ships by generating the highest guest satisfaction ratings in the fleet coupled with very compelling financial returns,” said Richard D. Fain, chairman and chief executive officer.  Fain continued, “Ordering another such ship for delivery in 2016, at a lower cost, with better energy efficiency is very consistent with our balanced goals of prudent growth, return improvement and debt reduction.”