Royal Caribbean Q4 2022 Losses Deepen Despite Revenue Surge to $2.6 Billion

The cruise industry shows signs of revival, but inflation and economic uncertainties continue to challenge growth.

Highlights

• Royal Caribbean's adjusted earnings per share (EPS) for Q4 2022 are projected at -$1.37, improving from -$5.33 in the same quarter last year.
• Revenue is expected to soar over 165%, reaching approximately $2.6 billion.
• Significant debt remains from pandemic-related operational halts.
• While booking rates are climbing, inflation fears, recession risks, and lingering COVID-19 concerns persist.

Royal Caribbean Group (RCL), the world's second-largest cruise operator by 2021 revenues, is anticipated to report a return to net losses in Q4 2022 after achieving profitability in Q3. This occurs even as the company experiences a near tripling of revenue fueled by renewed cruise demand.

Analysts estimate net losses of $355.8 million and adjusted losses of $1.37 per share, both improvements compared to the previous year’s quarter. Revenue is forecasted to jump 165% to $2.6 billion. The company will release its Q4 results before market open on February 7.

Following severe impacts from COVID-19 shutdowns, cruise bookings have recently increased, particularly on smaller luxury vessels, as global ports reopen. Despite ongoing inflation and recession concerns, industry-wide booking patterns are trending back to pre-pandemic norms, including longer lead times, according to Morgan Stanley. However, passenger apprehension about COVID-19 outbreaks remains a challenge for the sector.

Royal Caribbean reports strong positioning with 2023 bookings reaching historic levels and pricing. Nevertheless, the company continues to manage a heavy debt burden, which escalated to $23 billion due to early pandemic suspensions. Interest expenses hit $352 million in Q3, with similar costs expected in Q4.

Since last summer, Royal Caribbean’s stock has rebounded but remains down roughly 14% over the past year, slightly outperforming the S&P 500 Consumer Discretionary Index, which fell 16% during the same period.

Data source: Visible Alpha

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