Carnival profits plummet

CARNIVAL Corp’s profits fell by 32% in the second quarter, driven down by weak ticket prices and unfavourable currency moves.

Carnival today reported net income of $264M for 2Q09 versus $390M for 2Q08. Net revenue yields – the best indicator of ticket pricing and onboard spending – fell 16.8% including currency impact.

“During the quarter, our operating companies remained focused on reducing costs, which is expected to continue through the remainder of the year,” said chairman Micky Arison. Carnival’s cost-reduction plan includes a variety of energy conservation programmes that cut fuel consumption per available berth by 6% in 2Q09.

Arison noted that since the start of this year, Carnival has completed more than $2.8Bn in financing at favourable rates. Included in that total was a 550M euro loan from the European Investment Bank for Costa’s newbuildings, representing the first EIB involvement in the cruise sector.

Carnival cut its outlook today for full-year 2009 earnings to $2.00-$2.10/share, from its previous guidance of $2.10-$2.30/share. Higher fuel costs combined with swine flu impacts are projected to cut earnings by $0.40/share, but this is being offset by strengthening yields and lower costs. “As we have progressed throughout the year, booking volumes have continued to accelerate with less discounting,” reported Arison.

(Source: Fairplay Shipping News)