Royal Caribbean Cruises up as market rebounds

Royal Caribbean Cruises Ltd, the world's No.2 cruise operator, reported a better-than-expected quarterly profit as customers spent more onboard and demand rose for its Caribbean and European cruises.

Shares of the company, which also announced a $500 million share buyback program, were up 3 percent in morning trading on Friday.

The company has been struggling to boost sales in its biggest market, the Caribbean, where over capacity led to intense competition from larger rival Carnival Corp and other smaller operators such as Europe-based MSC Cruises.

"The company generated a lot more revenue this year as it reallocated ships to other parts of the world, including China," Wedbush Securities analysts James Hardiman said.

Sales also got a boost from the company's move to put an end to last minute discounting in March, when bookings for the summer season are at their peak.

Royal Caribbean's ticket prices held up very well in the quarter, Morningstar analyst Jaime Katz.

Net revenue per available berth, or net yields, rose 0.2 percent in the third quarter ended Sept. 30, marking its first quarterly increase this year.

Total revenue rose 5.4 percent to $2.52 billion in the third quarter, helped by a 7.8 percent rise in onboard spending.

The Miami, Florida-based cruise operator also raised its full-year profit forecast to $4.80 per share. The company had previously forecast earnings of $4.65-$4.75 per share.

Net income, however, halved to $228.8 million, or $1.03 per share, primarily due to a non-cash writedown of its Pullmantur operations, which has been hit by weakness in the Latin America market, especially Brazil.

The company said it would restructure its brand and expected charges of about $5-$10 million in future quarters.