By Nick Turner
(Bloomberg) — Royal Caribbean Cruises Ltd. dropped as much as 6.5 percent after the cruise line cut its annual profit forecast, blaming fuel prices and the stronger dollar.
The company now expects earnings to be $4.45 to $4.65 a share this year, excluding some items, according to a statement on Monday. That’s 20 cents less than its previous forecast.
Royal Caribbean becomes the latest U.S. company to say the rising dollar is eating into profit, joining Monsanto Co., Netflix Inc. and Hewlett-Packard Co. While bookings are up, guests who hail from outside the U.S. have less to spend onboard, the company said. Even so, cost cuts at the cruise line have limited the impact on profit.
“The business continues to perform well, despite the currency volatility,” Jason T. Liberty, Royal Caribbean’s chief financial officer, said in a statement.
Shares of the Miami-based company fell 5.8 percent to $74.46 at 9:35 a.m. in New York, after dropping as low as $73.93 earlier. The stock had declined 4.1 percent this year through the end of last week.
Booking volume rose in the first quarter, with strong demand in the Caribbean, Europe and China. The company said it hedges just over half of its fuel costs, which will total $834 million this year. Every 10 percent change in fuel prices costs the company $22 million annually.
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