Royal Caribbean Cruises Ltd (NYSE:RCL) shares slumped more than 5% as projected higher cruise costs tainted its better-than-expected performance during the second quarter.
The cruise operator now expects its full-year cruise costs to rise about 6%, above its earlier forecast of a 5.5% increase.
For Q2, revenue increased 16% year-over-year to $4.1 billion, ahead of estimates of $4 billion.
Adjusted earnings per share (EPS) were $3.21, above estimates of $2.77, attributed to stronger pricing on close-in demand and onboard revenue strength.
Based on continued strong demand, Royal Caribbean raised its full year adjusted EPS guidance to $11.35 to $11.45, up from its earlier guidance range of $10.70 to $10.90.
"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 in a statement.
"As we look forward, we remain intensely focused on driving strong shareholder returns by delivering a lifetime of vacations and taking a greater share of the rapidly growing $1.9 trillion global vacation market.”
However, the company’s strong quarterly earnings and guidance raise were not enough to allay investors’ cost concerns, with shares of Royal Caribbean down 5.6% at about $155 in early trade on Thursday.