/Reuters Agency
Royal Caribbean forecast fourth-quarter 2025 earnings below expectations, as the cruise company faces rising costs, causing a drop of approximately 8% in its shares during early trading.
The company raised its annual earnings forecast, but this also came in below expectations, moderating a strong year in which its shares rose nearly 38%.
Rising fuel costs amid growing global tensions and expenses related to dry-docking, ship delivery, and maintenance have affected the company.
Royal Caribbean forecast that fourth-quarter adjusted earnings per share would be in the range of USD 2.74 to USD 2.79, below the average analyst estimate of USD 2.89, according to data compiled by LSEG.
“Cruise operators could also be facing pressure due to the (US) government shutdown, which affects port activity, adding to investor pessimism,” according to Robert Pavlik, senior portfolio manager at Connecticut-based Dakota Wealth.
Royal Caribbean indicated that the impact of weather phenomena and the unplanned extension of the temporary closure of its destination in Labadee, Haiti, will affect the current quarter’s margin.
The company’s third-quarter profitability increased by 3.8%, compared to a 13.4% jump a year ago and an 11% increase in the previous quarter. Meanwhile, gross cruise costs per available passenger day rose 2.7%.
Royal Caribbean expects adjusted earnings per share for fiscal year 2025 in the range of USD 15.58 to USD 15.63, below the average analyst estimate of USD 15.68, according to data compiled by LSEG.
It had previously forecast a range of USD 15.41 to USD 15.55 per share. Still, analysts remain optimistic about the overall demand for cruises, as customers, especially higher-income ones, prioritize experiences over other discretionary spending.
“Cruises continue to outperform most other travel and leisure categories,” said Michael Gunther, an analyst at Consumer Edge, adding that growth has been “particularly strong” among groups with annual incomes between USD 100,000 and USD 150,000.
For the third quarter ended September 30, Royal Caribbean reported revenue of USD 5.140 billion, in line with the average analyst estimate of USD 5.160 billion, while adjusted earnings of USD 5.75 per share beat expectations of USD 5.67.
