April 30 (Reuters) - Royal Caribbean cut its annual earnings forecast on Thursday, even after it reported a better-than-expected quarterly profit, as surging fuel costs linked to the Iran war weigh on the cruise operator.
Still, its shares jumped 6% before the bell, as demand for its vacation destinations remained resilient. Bookings for high-yield Mediterranean itineraries, which had softened due to geopolitical tensions, have now rebounded and are currently running at a higher pace than the same
time last year, the company said.
Royal Caribbean's efforts of investing in diverse offerings such as private islands and new cruise itineraries, including "Star of the Seas", have helped in drawing seasoned cruisers and new customers alike.
The company expects its annual revenue to grow roughly 10%, compared with its prior forecast of double-digit growth.
Fuel costs, based on current at-the-pump rates, net of hedging, however, are expected to be about $1.3 billion higher than its prior full-year forecast of about $1.17 billion, Royal Caribbean said. The company is 59% hedged for the remainder of 2026 at below-market rates.
The second quarter has higher exposure to higher-yielding itineraries affected by recent global events, with these dynamics also impacting the third quarter, it said.
Cruise operators, heavily dependent on fuel oil and marine gas oil, are navigating a tougher environment as stalled U.S.-Iran negotiations raise concerns about prolonged disruptions to the Middle Eastern supply, driving up oil prices.
Royal Caribbean expects adjusted profit for fiscal 2026 to be in the range of $17.10 to $17.50 per share, compared with its prior forecast of $17.70 to $18.10.
First-quarter revenue stood at $4.45 billion, largely in line with analysts' estimates, according to data compiled by LSEG.
Its quarterly adjusted profit of $3.60 per share topped the estimate of $3.19, benefiting from higher ticket pricing.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shilpi Majumdar)
