Carnival Narrows Annual Earnings Forecast Amid Higher Costs
Published on Mar 26 2014 7:03 AM in General Industry
Carnival Corp, the world’s largest cruise line operator, narrowed its full-year profit forecast amid higher costs and lower ticket prices to attract customers hesitant about incidents at sea.
Earnings per share will be $1.50 to $1.70, the Miami-based company said today in a statement. That’s down from a previous forecast of $1.40 to $1.80 a share. Analysts projected $1.72, the average of estimates compiled by Bloomberg. Carnival also projected profit for the current quarter that trailed estimates.
Carnival has been trying to burnish its image and reassure passengers after incidents in the past two years including onboard illnesses, a fire on a Triumph cruise and the wreck of its Costa Concordia ship off the Italian coast in 2012. Under Chief Executive Officer Arnold Donald, who took over in July, Carnival has introduced a $25 million marketing campaign and made investments in ship safety and entertainment.
“The market is likely to take this tightening badly,” Ian Rennardson, an analyst with Jefferies Group LLC in London, said today in a research note. “This was worse than expected.”
The shares fell 5 percent at $38.02 at the close in New York. They have risen 13 percent in the past year.
Booking volumes for the rest of the year are ahead of last year at lower prices, the company said today.
Carnival said results in the second quarter will be in a range of a loss of 2 cents a share to profit of 2 cents a share. That compares with analysts average estimate of profit of 8 cents. The company said net cruise costs excluding fuel for the period are expected to be up 2.5 percent to 3.5 percent compared to a year earlier because of higher selling and administrative costs.
During the first quarter, the number of passengers rose 4.5 percent to 2.4 million. Ticket revenue fell 0.5 percent to $2.7 billion while onboard revenue increased 0.7 percent to $850 million.
The net loss in the quarter ended Feb. 28 totaled $15 million, or 2 cents a share. Excluding some items, the company posted break-even results, beating the analysts’ estimates of a loss of 8 cents a share.