Analysis of Property, Plant and Equipment
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Royal Caribbean Cruises Ltd. pages available for free this week:
- Cash Flow Statement
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
- Aggregate Accruals
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Property, Plant and Equipment Disclosure
Royal Caribbean Cruises Ltd., balance sheet: property, plant and equipment
US$ in thousands
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial data reveals several key trends in the property, plant, and equipment (PP&E) components over the five-year period ending December 31, 2021.
- Ships
- The value of ships consistently increased each year, rising from approximately 23.7 billion USD in 2017 to over 31.3 billion USD in 2021. This steady growth indicates ongoing investment or acquisition in this category, reflecting fleet expansion or upgrades.
- Ship Improvements
- Ship improvements showed fluctuation; an upward trend from 2.4 billion USD in 2017 to a peak of 3.9 billion USD in 2019 was followed by a sharp decline in 2020 to about 2.1 billion USD, remaining relatively stable in 2021. The decrease in 2020 likely reflects reduced capital expenditure possibly due to external factors such as operational disruptions.
- Ships Under Construction
- Investment in ships under construction steadily increased from approximately 642 million USD in 2017 to around 1.18 billion USD in 2021. This continuous growth suggests the company has been actively engaged in building new vessels, indicating future fleet expansion plans.
- Land, Buildings, and Related Improvements
- This category showed the most pronounced growth rate, rising from 250 million USD in 2017 to about 747 million USD in 2021. The increase was especially notable after 2019. This may signal strategic investments in infrastructure, such as port facilities and leasehold improvements.
- Computer Hardware, Software, Transportation Equipment, and Other
- Values in this category increased substantially from 763 million USD in 2017 to a peak of approximately 1.7 billion USD in 2019, but then slightly decreased in the subsequent years, standing at about 1.65 billion USD by 2021. The 2019 peak might reflect significant technology upgrades, while the slight decline thereafter suggests a stabilization or reduced investment.
- Property and Equipment, Gross
- The gross property and equipment amount grew from around 27.8 billion USD in 2017 to approximately 37.1 billion USD in 2021. The growth trajectory was strong until 2019, with a minor dip in 2020, followed by recovery in 2021. This corresponds with the individual asset trends, indicating overall capital asset expansion over the period.
- Accumulated Depreciation and Amortization
- Accumulated depreciation and amortization increased steadily in magnitude (more negative) from -8.0 billion USD in 2017 to nearly -11.2 billion USD in 2021. This reflects ongoing consumption of asset value consistent with aging fleets and other equipment.
- Property and Equipment, Net
- The net property and equipment value rose from approximately 19.7 billion USD in 2017 to 25.9 billion USD in 2021, showing overall growth in net asset base despite depreciation. There was a slight dip in 2020 compared to 2019, but 2021 figures indicate recovery and renewed growth.
Overall, the data indicates a strategy focused on fleet expansion and infrastructure enhancement, with significant investment continuing in ships and related improvements. The deceleration during 2020 across several categories likely reflects external operational challenges but the recovery evident by 2021 suggests resumption of capital expenditures. The net asset base growth alongside rising accumulated depreciation highlights an ongoing balance between asset renewal and consumption.
Asset Age Ratios (Summary)
Royal Caribbean Cruises Ltd., asset age ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The average age ratio of property, plant, and equipment exhibits a generally stable trend with minor fluctuations over the observed periods. Initially, the ratio decreased from 28.96% at the end of 2017 to 27.65% at the end of 2018, indicating a slight renewal or addition of assets that lowered the average age.
Subsequently, the ratio increased marginally to 28.36% in 2019 and remained nearly flat at 28.41% in 2020, suggesting a period of relative constancy in the age of the asset base without significant disposals or new asset investments altering the average age significantly.
In 2021, there was a noticeable increase to 30.14%, marking the highest point in the period analyzed. This rise may indicate aging assets without proportionate additions or replacements, reflecting either deferred capital expenditures or a strategic decision to utilize existing assets longer.
- Trend Summary
- The average age ratio showed an initial decline, followed by a stable phase, and then a rise in the final year.
- Implications
- The increasing average age ratio in the last reported year may suggest approaching asset renewal needs or potential impacts on operational efficiency and maintenance costs in the near future.
Average Age
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
2021 Calculations
1 Average age = 100 × Accumulated depreciation and amortization ÷ Property and equipment, gross
= 100 × ÷ =
The financial data for property, plant, and equipment over the five-year period reveals notable trends in asset valuation and aging.
- Accumulated depreciation and amortization
- There is a consistent increase in accumulated depreciation and amortization from 8,044,916 thousand USD in 2017 to 11,179,731 thousand USD in 2021. This upward trend reflects ongoing usage and wear of the fixed assets, as well as sustained amortization charges over the years.
- Property and equipment, gross
- The gross value of property and equipment exhibited steady growth, rising from 27,780,096 thousand USD in 2017 to 37,087,680 thousand USD in 2021. Despite a slight decline in 2020 compared to 2019, likely influenced by external factors affecting capital expenditures or asset valuations, the overall trend indicates continued investment or asset acquisition.
- Average age ratio
- The average age ratio of the assets remained relatively stable from 2017 to 2020, fluctuating narrowly between 27.65% and 28.96%. However, there is a noticeable increase in 2021 to 30.14%, suggesting the asset base slightly aged during this period. This rise may imply that additions to property and equipment were comparatively limited or that older assets constitute a larger portion of the total asset base.
Overall, the data suggests a pattern of ongoing asset investment accompanied by increasing cumulative depreciation, with a gradual aging of the asset base toward the end of the period. The modest dip in gross property and equipment in 2020 aligns with external disruptions possibly impacting capital expenditures.