Royal Caribbean lifts profit forecast, reinstates dividend as cruise demand thrives

By Juveria Tabassum and Doyinsola Oladipo

(Reuters) -Royal Caribbean Group raised its annual profit forecast on Thursday and said it would reinstate its dividend, with the company coming a full circle from the pandemic as people flock to its cruises.

Cruise operators have hiked ticket prices over the past two years on growing interest among Europeans and record demand from Americans splurging on experiences.

"Exceptional demand for our vacation experiences has accelerated our performance by generating significant yield growth over the past several years," Royal Caribbean CEO Jason Liberty said.

"We have seen strength for all key products and are already taking more bookings for 2025 sailings than 2024."

However, the company's shares fell 4% in morning trade after Royal Caribbean said it expected stock-based compensation and an increase in dry dock days in the fourth quarter to increase its full-year net cruise costs by 0.5%.

Investors are also concerned about lower-than-anticipated improvement in occupancy levels.

"The company is now lapping quarters where the business was back to full operations, so we expected more tempered growth in yields and occupancy from those levels," Ken Kuhrt, portfolio manager at Ariel Investments, said.

Occupancy levels during the second quarter were 108.2%, compared with 108.5% during the same period in 2019.

Royal Caribbean also became the first U.S.-based cruise operator to reinstate quarterly dividend, starting October, at 40 cents per share.

The company, along with its peers Carnival and Norwegian Cruise Line, suspended dividends in 2021 due to the pandemic's impact.

Royal Caribbean forecast annual adjusted earnings per share between $11.35 and $11.45, compared with its earlier expectations of $10.70 to $10.90.

The Silversea Cruises parent also topped market expectations for second-quarter revenue and profit, and forecast current-quarter profit above analysts' estimates, according to LSEG data.

On an adjusted basis, Royal Caribbean earned $3.21 per share in the second quarter, beating estimates of $2.75. The company also reported better-than-expected revenue of $4.11 billion.

(Reporting by Juveria Tabassum and Doyinsola Oladipo; Editing by Krishna Chandra Eluri, Shinjini Ganguli and Shounak Dasgupta)