Royal Caribbean Cruises Ltd.  today announced better than expected fourth quarter and full year 2010 results and provided earnings guidance for 2011.

Key Highlights

For the Fourth Quarter 2010:

Net income was $42.7 million, or $0.20 per share versus $3.4 million, or $0.02 per share in 2009;

Weather and currency related issues reduced earnings by $0.03 per share, but were more than offset by higher revenues and cost containment;

Net Yields increased 3.2%, (4.2% on a Constant Currency basis). Absent extreme weather conditions, constant currency Net Yields would have increased 4.7%;

Net Cruise Costs per APCD ("NCC") were flat, (up 1.0% on a Constant Currency basis).

For the Full Year 2010:

Net Yields increased 4.2% (4.4% on a Constant Currency basis);

NCC declined 1.8% (down 1.3% on a Constant Currency basis);

NCC excluding fuel declined for the third year in a row and were down 1.6%;

Net income was $547.5 million, or $2.51 per share versus $162.4 million, or $0.75 per share in 2009.

2011 Guidance:

Net Yields are expected to improve 4% to 6% for the full year and 2% to 3% in the first quarter;

NCC excluding fuel are expected to increase approximately 2% for the full year and the first quarter;

EPS is expected to be between $3.25 and $3.45 for the full year and $0.10 to $0.15 for the first quarter of 2011, based on current fuel prices and currency exchange rates.

"These improved results reflect the strong reception our new ships have received along with the solid branding our different cruise brands have enjoyed," said Richard D. Fain, chairman and chief executive officer. Fain continued, "WAVE is off to a solid start and supports our earlier confidence in meaningful pricing recovery and record financial performance in 2011."

Fourth Quarter 2010 Results

Royal Caribbean Cruises Ltd. today announced net income for the fourth quarter 2010 of $42.7 million, or $0.20 per share, compared to net income of $3.4 million, or $0.02 per share, in the fourth quarter of 2009.

Revenues improved to $1.6 billion in the fourth quarter of 2010 compared to $1.5 billion in the fourth quarter of 2009 as a result of capacity increases and yield improvements. Net Yields for the fourth quarter of 2010 increased 3.2% (4.2% on a Constant Currency basis). During this last quarter, extreme weather conditions impacted some of the company's voyages and impaired some of its guests' ability to make their departures. Absent these weather disruptions, Net Yields on a Constant Currency basis would have increased 4.7%, in line with previous guidance.

Costs in the fourth quarter of 2010 were well controlled and to a lesser extent some timing shifts to the first quarter of 2011 occurred. NCC were flat, and NCC excluding fuel increased 1.7%. Excluding currency impacts, the comparable figures would have been increases of 1.0% and 2.9%, respectively.

The company's energy consumption efforts were also better than previous guidance with usage of 344,000 metric tons during the fourth quarter. At-the-pump pricing (including the benefit of the company's hedging program) was in line with earlier calculations at $474 per metric ton. Taken together, the quarter's fuel expenditures were approximately $4 million better than previous calculations.

Full Year 2010 Results

Net income for the full year 2010 was $547.5 million, or $2.51 per share, compared to net income of $162.4 million, or $0.75 per share, for the full year 2009. Revenues for the full year 2010 increased 15% to $6.8 billion from revenues of $5.9 billion for the full year 2009. Net cruise costs excluding fuel declined for the third year in a row and were down 1.6%. Despite significant market price increases, fuel costs per metric ton increased only 1% to $493 as a result of the company's hedging program. Since 2005, the company has reduced energy consumption per APCD by 15% and full year 2010 consumption was 1,311,000 metric tons.

2011 Outlook

The company reported that early "WAVE season" bookings have been encouraging and booked load factors and average per diems are ahead of same time last year. On an as reported basis, the company expects net yields to increase between 4% and 6% for the full year and 2% to 3% for the first quarter of 2011. On a Constant Currency basis, Net Yields are forecasted to be up between 4% and 5% for the full year and to increase 1% to 2% in the first quarter of 2011.

On a Constant Currency basis, NCC excluding fuel are forecasted to be up 1% to 2% for the full year and the first quarter of 2011. On an as reported basis, NCC excluding fuel are expected to be up approximately 2% for the full year and the first quarter of 2011.

Based upon the above and current fuel prices and currency exchange rates, the company expects full year EPS will be between $3.25 and $3.45 per share. "Our company continues to focus on costs and improving its financial performance," said Brian J. Rice, executive vice president and chief financial officer. "This focus, combined with the improving pricing power of our brands should generate significant earnings opportunities as we move into 2011 and beyond."

In commenting on its guidance, the company noted the potential for an increasing role of its tour operations which include Royal Celebrity Tours, Pullmantur's tour businesses and other operations on its yield and net cruise costs metrics. The company noted that revenues and expenses associated with such operations tend to be more volatile and less predictable than its main cruise businesses. Because these tour businesses have relatively low margins, this volatility has little impact on bottom line results but can cause fluctuations in the financial statistics for revenues and operating costs.

Fuel Expense

The company does not forecast fuel prices and its cost calculations are based on current at-the-pump prices net of hedging impacts. Based on today's fuel prices the company has included $168 million and $705 million of fuel expense in its first quarter 2011 and full year 2011 guidance, respectively. The company continues to focus on managing its operations and itineraries more efficiently. As a result, forecasted fuel consumption per APCD is down a further 6% for 2011.

Forecasted consumption is now 58% hedged for the remainder of 2011, 55% hedged in 2012, and 30% hedged in 2013. Additionally, as previously disclosed, the company utilizes fuel options which are marked-to-market each quarter as further protection against escalating fuel prices.