Carnival Corp.'s (CCL) fiscal second-quarter earnings dropped
93% as the cruise-line operator recorded unrealized losses from
fuel derivatives.
Adjusted profit comfortably beat the company's March estimates,
which were well below expectations at the time.
Carnival raised its full-year earnings guidance, citing
anticipated cost reductions and lower fuel prices. Based on current
booking trends, the company expects full-year earnings of $1.80 to
$1.90 a share, up from its formerly reduced estimate of $1.40 to
$1.70 a share. Carnival also forecast current-quarter earnings of
$1.42 to $1.46 a share, compared with the estimate of $1.44 a share
from analysts surveyed by Thomson Reuters.
The world's largest cruise operator--which runs lines such as
Holland America, Cunard and its namesake--had seen increased
revenue for the last two years as demand in the cruise industry and
broader travel sector grows despite a sluggish economy and worries
about unemployment.
However, the company was hit by a wave of negative publicity
following the Costa Concordia shipwreck in January. The Concordia
foundered after striking a rock off the coast of Italy, causing the
death of at least 25 people. The operator of the vessel, Costa
Crociere SpA, is a unit of Carnival. A few weeks later, the cruise
line took another public-relations hit when its Allegra ship
experienced an engine-room fire while sailing in the Indian Ocean,
leaving passengers without power or running water.
For the quarter ended May 31, Carnival reported a profit of $14
million, or two cents a share, down from $206 million, or 26 cents,
a year earlier. The most-recent quarter included $145 million of
unrealized losses on fuel derivatives. Adjusted earnings came in at
20 cents a share. In March, Carnival had forecast earnings for the
quarter at between five and nine cents a share.
Revenue fell 2.3% to $3.54 billion. Analysts polled by Thomson
Reuters recently forecast revenue of $3.55 billion.
Operating margin fell to 7.2% from 7.7%.
Net cruise costs, including fuel, fell 3.6% and were 2.2% lower,
excluding fuel. Fuel prices climbed 12% from the year-ago
quarter.
Advance bookings, excluding Costa, for the remainder of the year
are priced lower with lower occupancies versus last year.
Shares were up 13 cents to $34.45 in recent trading. The stock
is up 8% in the last three months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com