A sluggish economy in Southern Europe took a bite out of the bottom line for Royal Caribbean Cruises, as the Miami-based cruise company reported a $392 million loss for the fourth quarter and a small profit for the full year.
That hit was due to one-time impairment charges of nearly $414 million related to Spanish line Pullmantur, which has seen bookings and prices plummet as the local market suffers from a weak economy, government austerity programs and the lingering aftermath of last year’s Costa Concordia shipwreck.
Without the charges, the world’s second-largest cruise company would have posted a $21.1 million profit for the fourth quarter of 2012. Full-year net income would have been $432.2 million compared to $607.4 million in 2011, but with the charges, net income was just $18.3 million.
Revenue from passenger tickets and from onboard sales was $1.8 billion for the quarter, up 1.7 percent from the same period last year. Operating expenses were $1.3 billion, up 0.6 percent. Full-year revenues increased from $7.5 billion to nearly $7.7 billion.
The cruise line’s biggest increase in expenses came from fuel. It spent $229.3 million on fuel in the fourth quarter, up 10.2 percent from the same time last year. For the year, fuel costs soared 19 percent.
With apologies to Charles Dickens, Royal Caribbean Chairman and CEO Richard Fain referred to the global cruise business as “a tale of two continents,” with the United States performing well and some European countries lagging.
“Overall, I’m pleased with how we performed in 2012, given the external pressures,” he said. “Frankly, I would probably be ebullient right now if we were experiencing the same demand levels from Europe that we are experiencing domestically.”
The company, whose brands include Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises, said the traditionally busy booking period called wave season has gotten off to a strong start. Since passing the Jan. 13 anniversary of the accident involving Concordia, owned by competitor Carnival Corp., Royal Caribbean has seen booking volumes 20 percent higher than a year ago. But volumes are also greater than those in 2011, the company said.
Royal Caribbean stock closed at $35.53, down 3.42 percent Monday.
This report was supplemented with information from the Associated Press.