Royal Caribbean disclosed on Thursday that it is trimming its adjusted earnings guidance for fiscal 2026, attributing the revision to an increase in expected fuel costs amid ongoing tensions in the Middle East. The company said that stalled U.S.-Iran negotiations and related concerns about supply disruptions have pushed oil prices higher, pressuring margins for cruise operators that rely heavily on fuel oil and marine gas oil.
Based on current at-the-pump rates and after accounting for hedges, Royal Caribbean projects its fuel expense will be about $1.3 billion higher than it had previously forecast - an impact equivalent to roughly $0.62 per share. As a result, the company now expects adjusted earnings in the range of $17.10 to $17.50 per share for fiscal 2026, down from its earlier guidance of $17.70 to $18.10 per share.
Despite the reduction in the full-year outlook, Royal Caribbean reported an adjusted profit of $3.60 per share for the first quarter, beating the average analyst estimate of $3.19 per share compiled by LSEG. The stronger-than-expected quarterly result coincided with a rise in the company’s shares of about 5% in premarket trading.
The company noted that cruise operators are particularly exposed to swings in the cost of fuel oil and marine gas oil, and that the present geopolitical backdrop is elevating the risk of prolonged supply disruptions in the Middle East. Royal Caribbean’s updated guidance and the disclosed increase in fuel cost expectations reflect the company’s assessment of near-term market conditions rather than changes to underlying demand metrics that were reported with the quarterly results.
Also included in the reporting materials was a description of ProPicks AI, which evaluates RCL alongside many companies each month using a broad set of financial metrics and seeks to identify stocks with favorable risk-reward profiles. The material cited examples of stocks the system identified in the past, although those references were illustrative and not part of Royal Caribbean’s operational disclosures.
Investors and analysts will likely weigh the tension between the company’s quarterly profit outperformance and the lowered full-year forecast driven by higher fuel assumptions as they reassess cash flow and margin outlooks for the cruise operator.