Royal Caribbean (RCL) - Get Report shares could be under pressure Tuesday after the company announced it will cancel eight cruises out of China through March 4 while also modifying “certain itineraries in the region.”
The company said that it will take a charge of 25 cents a share from the cancellations. That number would be steeper than the “$3 to $4 million of revenue, and about $0.02 of earnings,” that Wedbush managing director James Hardiman estimated each lost voyage would cost the company. Hardiman made his comments in an interview with Yahoo.
Royal Caribbean also issued guidelines to “help protect guests and crew” that include denying boarding to any individual who has traveled from, to or through mainland China or Hong Kong in the past 15 days regardless of nationality, and mandatory health screenings for certain high-risk guests.
While the company said it will record the charge it also added “there are still too many variables and uncertainties regarding this outbreak to calculate the impact on the business.”
The company reported fourth-quarter earnings on Tuesday of $1.42 a share, matching analysts' expectations.
For fiscal 2020, Royal Caribbean said it expects to earn between $10.40 and $10.70 a share, though it did say those numbers don’t take into account the potential ongoing impact from the coronavirus.
"It's clear that the coronavirus will impact revenue in China in the short term, but we are a long-term business and our plans to continue growing this profitable market remain unchanged,” said Chief Financial Officer Jason Liberty.