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To paraphrase an old saying, when you talk about a billion dollars, you’re getting into serious money.
So when Richard D. Fain, Royal Caribbean Cruises Ltd. chairman and CEO took to the phone lines this morning for the company’s 2015 Q4 earnings call, he couldn’t resist taking a minute to “celebrate a successful year.”
That’s “successful” as in record earnings topping $1 billion. Adjusted net income, in fact, was $1.07 billion resulting in adjusted earnings of $4.83 per share.
The gravy on this meaty report was that 2015 marked the second consecutive year of 40-plus percent earnings growth for RCL.
Fain gave much of the credit to a nimble employee team responding as needed to adverse macroeconomic and geopolitical pressures.
“I’ve said it before and it still holds true,” Fain said, “that while many factors may cause disturbances for short periods, our team has shown a very strong capability to make adjustments when circumstances change.”
The proof, he said, was reaching a revenue target of 3.5 percent yield improvement while costs ended the year down 0.6 percent. That was in contrast to guidance of 1 percent or less in cost increase at the start of 2015.
“Looking at the full picture, we anticipated doubling our 2013 earnings per share and we exceeded that target by $0.03 a share at $4.83,” Fain continued. “The brands are delivering, and I congratulate all the employees of our company who worked so hard to make this happen.”
Despite pressures in Latin America, stronger demand in both the Caribbean and China – where cruising is still a new and hotly demanded vacation experience – allowed the company to post net income of $206.8 million for the quarter, compared to $109.8 million the year before.
While on the subject of growth and the Asia-Pacific region, Fain re-emphasized some newsmaking 2015 RCL investment there.
“This past year, we took a significant step forward … by establishing hospitality training schools like the one in Tianjin, China,” Fain said. “This school teaches the art and the science of hospitality. That’s an exciting challenge when most of the students have never themselves stayed in a hotel.
“The development of this school marks another important step in further deepening our roots with the local community in Mainland China as it is a strategic partnership with the state-owned Tianjin Maritime College.”
Besides the Chinese training facility, Fain noted that a second such school was set up in Lombok, Indonesia in July, and another will be opened this spring in Pasay, Philippines.
Back to business performance, Fain said company metrics indicate that RCL remains on course in 2016 to meet its publicized targets for the program known as Double-Double – doubling 2014’s earnings per share and double-digit ROIC by 2017.
In addition, he continued, RCL’s year-old price integrity policy gets some of the credit for the line’s favorable booked position for 2016. After adopting the policy of avoiding last-minute deep discounts on fares “which cheapen our brand and upset our loyal customers,” it has since made some exceptions depending on itineraries.
Those “different rules for different itinerary lengths was possibly confusing and definitely unnecessary,” Fain said. “We have therefore expanded the policy to make the no-new-discount period consistently 30 days regardless of itinerary.”
For more details on RCL’s 2015 Q4 earnings call, please click through to Investor Relations.