Fuel costs dampen Royal Caribbean profits
The rising cost of fuel hit second quarter profits at Royal Caribbean Cruises.
The parent company of Royal Caribbean International and Celebrity Cruises saw net income for the three months ending June 30 decline to $122.4 million against $155.2 million for the same period last year. Revenues were up from $1.2 billion to $1.3 billion.
Cruise costs rose by more than 14% with fuel accounting for over five percentage points of the increase. The line’s ‘at the pump’ prices averaged $460 per metric ton, more than $100 up on the equivalent figure last year of $337.
The company revealed that it plans to start using ‘limited quantities’ of alterative fuel source biodiesel made from vegetable oil feed stocks such as soy bean or palm oil on its gas turbine ships.
“Biodiesel has significant environmental benefits, including lower NOx (Nitrogen Oxideds) emissions, as well as being a renewable energy source,” a statement from the world’s second largest cruise group said.
This came as the company revealed that current fuel prices had hit $448 per metric ton, 16% higher than the average price of $385 in the third quarter of last year. If existing prices are maintained, Royal Caribbean expects fuel costs for the third quarter to rise by $25 million and $115 million for the rest of the financial year.
Other costs which impacted in the second quarter included expenses for the launch of the world’s largest cruise ship Freedom of the Seas, refurbishment of Celebrity ship Century and additional operating costs in Cozumel due to hurricane damage.
Chairman and CEO Richard Fain said: “Despite continuing pressure from higher fuel prices, our second quarter results were better than we expected. We are especially pleased with the performance of our two brands which continue to drive strong yield growth.”
Report by Phil Davies
Phil Davies
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