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BUNKER INDEX :: Price Index, News and Directory Information for the Marine Fuel Industry
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Royal Caribbean consumes 6.4% less fuel in Q2 as net income jumps 60.7%

02 Aug 2017 10:22 GMT

Cruise operator saw H1 bunker expenses drop 1.2% and net income skyrocket 77.6%.

Royal Caribbean Cruises Ltd reports that fuel expenses during second quarter (Q2) fell by $5.9 million, or 3.3 percent, to $170.7 million, compared to the corresponding period last year.

For the first half (H1) of 2017, the world's second-largest cruise operator recorded a year-on-year (YoY) drop in bunker costs of $4.3 million, or 1.2 percent, to $348.2 million.

Royal Caribbean said Q2 bunker consumption fell by 22,000 tonnes, or 6.4 percent, to 324,000 tonnes. Bunker pricing net of hedging in Q2 was $527 per metric tonne - up from last year's $511-per-tonne price.

The US cruise firm expects to consume 329,000 metric tonnes of bunker fuel in Q3 and 1,334,000 metric tonnes this year.

Based on current fuel prices, overall bunker expenses in 2017 are forecast to be $706 million, with $176 million expected to be spent in Q3.

Forecasted consumption is 64 percent hedged via swaps for 2017 and 54 percent, 45 percent, 35 percent and 15 percent hedged for 2018, 2019, 2020 and 2021, respectively.

For the same five-year period, the average cost per metric tonne of the hedge portfolio is approximately $487, $421, $331, $340 and $351, respectively.

Royal Caribbean estimates that a 10 percent change in the price of bunker fuel would result in an $8 million variation in bunker expenses in Q3 and a $15 million correction in fuel costs for the full year.

Overall results

In its financial results for Q2, Royal Caribbean posted a net income of $369.5 million compared to $229.9 last year - representing a YoY rise of $139.6 million, or 60.7 percent.

Total revenue during the three-month period was $2,195 billion, up from $2.105 billion a year ago. After deducting expenses, operating income amounted to $419.7 million - a YoY improvement of $137.4 million, or 48.7 percent.

In H1, net income was up $255.2 million YoY, or 77.6 percent, to $584.2 million. Operating income rose $253.8 million, or 57.0 percent, to $699.2 million, whilst revenue was at $4.204 billion, up from last year's figure of 4.023 billion.

"Our brands are executing beautifully, keeping the business in an exceptionally strong position," said Richard D. Fain, chairman and CEO. "Strong close-in demand for cruise bolstered the quarter, and we see further uplift for the balance of the year, positioning us well for the Double-Double and beyond."

Image: Royal Caribbean's Harmony of the Seas cruise vessel.

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