What happened
Shares of Royal Caribbean (RCL -2.60%) were sinking Friday after the cruise line giant reported a larger-than-expected hole in its fourth-quarter earnings before the market opened. As of 1:15 p.m. ET, the stock was down by 3.3%.
The thing is, ahead of the Q4 release, analysts weren't even particularly upbeat about the company's prospects, forecasting sales of only $1 billion and a $3.92 per share pro forma loss for the quarter. But even those numbers turned out to be over-optimistic: Royal Caribbean reported that it actually lost $4.78 per share on sales of $982.3 million.
Image source: Getty Images.
So what
Management put a brave face on the results, reminding investors that 2021 was only "the beginning of our return to our mission," and that even 2022 "will be a ... transitional year" -- albeit a "strong" one. And Royal Caribbean is making headway in its efforts to get back to something like normal.
"We made significant progress toward our recovery with over 85% of our capacity returning to operations and [carrying] approximately 1.3 million guests," said CEO Jason Liberty. That being said, Royal Caribbean suffered an unwelcome disruption to its plans when "Omicron created short-term operational challenges" last year, resulting in "cancellations and [depressed] bookings for near-term sailings."
Now what
As a result of this disruption, Liberty warned that bookings for the first half of 2022 have been set back, which he said "will likely delay our return to profitability by a few months." So, not only did Royal Caribbean lose more money than expected in Q4, the analysts who predicted that it would shift back to profitability in Q2 2022 are probably going to be disappointed.
Management still believes that "load factors for sailings in the second half of 2022" will return to their historical ranges, however, and at higher prices, which could boost profit margins. As a result, Royal Caribbean is forecasting that by the second half of this year, it will be once again profitable, with positive operating cash flow.
Fingers crossed.
