Royal Caribbean logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration

By Neil J Kanatt

(Reuters) -Royal Caribbean forecast fourth-quarter profit below expectations on Tuesday, as the cruise operator faces higher costs, sending its shares down about 8% in early trading. The company raised its forecast for annual profit but that too fell short of expectations, tempering a strong year that saw shares rise about 38%.

Increased fuel costs amid escalating global tensions and expenses related to drydocking, ship deliveries and maintenance have hit the company.

Royal Caribbean forecast fourth-quarter adjusted profit per share to be in the range of $2.74 to $2.79, below analysts' average estimate of $2.89, according to data compiled by LSEG.

Cruise operators may also be seeing pressure due to the government shutdown affecting port activity, further casting a gloom on investor sentiment, said Robert Pavlik, senior portfolio manager at Connecticut-based Dakota Wealth.

Royal Caribbean said the impact of weather events and the unplanned extension of the temporary closure of its Labadee, Haiti destination will weigh on current-quarter margin.

The company's third-quarter margin rose 3.8%, compared with a 13.4% jump a year ago, and an 11% increase in the prior quarter.

Gross cruise costs per available passenger cruise days increased 2.7%.

Royal Caribbean expects fiscal 2025 adjusted profit per share of $15.58 to $15.63, below analysts' average estimate of $15.68, according to data compiled by LSEG. It had previously forecast a range of $15.41 to $15.55 per share.

Still, analysts remained bullish on overall cruise demand as customers, especially higher income, pick experiences over other discretionary spending.

"Cruises continue to outperform most other travel and leisure categories," Michael Gunther, analyst with Consumer Edge, said, adding that growth was "particularly robust" within groups whose income is between $100,000 and $150,000 annually.

For the third quarter ended September 30, Royal Caribbean posted revenue of $5.14 billion, in line with analysts' average estimate of $5.16 billion, and an adjusted profit of $5.75 per share that exceeded expectations of $5.67.

(Reporting by Neil J Kanatt in Bengaluru; Editing by Shinjini Ganguli)