CCL Carnival Corp

By Tess Stynes 

Carnival Corp. said its earnings soared in its latest quarter as the cruise-ship company benefited from lower costs and better-than-expected revenue.

Shares fell 40 cents to $43.24 in recent trading. Earlier Tuesday, the stock rose as much as 5.8% as the company's per-share earnings, excluding certain one-time items, topped expectations.

"This is shaping up to be another strong year," Chief Executive Arnold Donald said in prepared remarks Tuesday touting its recent dividend increase and the board's approval on Monday of the repurchase of an additional $1 billion shares of the company's stock.

Shares of Carnival Corp. have declined 12%, along with the broader travel sector, since Britain's vote to leave the European Union last week.

Carnival did project earnings for the current quarter below analysts' expectations. The company forecast per-share earnings of $1.83 to $1.87, while analysts polled by Thomson Reuters expected per-share profit of $1.98.

Carnival, which is dual-listed in the U.S. and the U.K., has benefited in recent quarters from low fuel prices, higher prices and strong bookings.

In its press release Tuesday, Carnival said bookings for the rest of the year are well ahead of the prior year at slightly higher prices. The company, which operates Carnival Cruise Lines as well as the Princess, Cunard and Holland America lines, also said that since March, bookings have been at higher prices but volumes have been running lower because there is less available inventory remaining this year.

Bookings for the first three quarters of 2017 already are ahead of schedule, Carnival CFO David Bernstein added on a conference call with analysts, although he cautioned it is still early going.

Customers booking months in advance should help cushion some of the current market volatility due to the United Kingdom's decision to exit the European Union last week.

The British pound accounts for 30% of the company's currency exposure, something that could impact earnings if its valuation stays depressed. Factoring in all currencies, Carnival expects a full-year impact of 27 cents a share for a 10% change in all currencies relative to the U.S. dollar.

"All things considered, bookings for our ships sailing to Europe has held up well," said Mr. Donald on the call. And strength in both the Caribbean and Alaska this year should help improve yields, allowing the company to uphold its promise boost earnings by more than 20% in 2016.

Still, the company plans to reduce European capacity by about 5% in favor of growing more in the burgeoning Chinese market.

Mr. Donald said that China continues to be a promising source for long-term growth within the cruise industry. The company plans to increase capacity by more than 30% in 2017, compared with a 60% increase this year. Still, China represents only about 5% of the company's global capacity, something expected to grow to 6% next year.

For the period ended May 31, Carnival reported a profit of $605 million, or 80 cents a share, up from $222 million, or 29 cents a share, a year earlier. Excluding fuel-hedging impacts and other items, per-share earnings rose to 49 cents from 25 cents. The company had forecast adjusted per-share profit of 34 cents to 38 cents.

Revenue increased 3.2% to $3.7 billion. Analysts had expected revenue of $3.68 billion.

Excluding currency effects, net revenue yields -- a measure of revenue relative to capacity -- rose 3.6%, above the company's guidance for an increase of 1.5% to 2.5%.

Excluding fuel expenses, net cruise costs decreased 1.9%, compared with estimates for an increase of between 0.5% and 1.5%. The company attributed the lower costs to a shift in the timing of expenses.

For the fiscal year ending in November, the company narrowed its per-share earnings estimate to $3.25 to $3.35 on a 3.5% increase in net revenue yields, excluding currency fluctuations. The company previously had projected per-share profit of $3.20 to $3.40 and net revenue yield growth of roughly 3%, excluding currency fluctuations.

Write to Tess Stynes at tess.stynes@wsj.com

(END) Dow Jones Newswires

June 28, 2016 14:33 ET (18:33 GMT)

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