Carnival boosts 2009 outlook, shares surge
Carnival Corp & Plc lifted its 2009 earnings forecast on Tuesday and said ticket prices for its cruises were stabilizing, boosting shares of the world’s largest cruise operator as much as 9 percent.
Bookings for the next three quarters were 19 percent ahead of 2008 levels, spurred in part by heavy discounting. Travelers are also booking cruises earlier, which has helped rates stabilize, Carnival noted.
Chief Operating Officer Howard Frank said during a call that rates were unlikely to fall further in the fourth quarter, given the strength of late bookings.
“For a limited number of itineraries … we have been able to move prices up,” added Frank, who also acts as Carnival’s vice chairman.
Frank said 2010 would likely be a stable year, but rising unemployment and the housing crisis remained major obstacles to a full recovery.
“It is going to be a fairly stable environment, maybe slightly improving, but nothing more than that,” he said.
Carnival expects to earn between $2.16 and $2.20 per share in 2009, an increase from its earlier range of $2.00 to $2.10. The company sees a 14 percent drop in net revenue yields, a key measure of revenue performance in the industry.
The company added that fuel prices would be higher than forecast in 2009, costing the company 5 cents per share. This would be partially offset by a weaker dollar, which would contribute 3 cents per share.
Shares of Miami-based Carnival spiked 7 percent to $34.27 on the New York Stock Exchange in afternoon trading. Its main rival, Royal Caribbean Cruises Ltd, saw its stock jump 4.1 percent to $24.20.
Carnival’s credit default swaps tightened on Tuesday, meaning that it cost less to insure the company’s debt against the risk of default than late last week, traders said.
THIRD-QUARTER RESULTS BEAT ESTIMATES
For the third quarter, ended August 31, Carnival reported a net profit of $1.1 billion, or $1.33 per share, surpassing analyst estimates of $1.18 per share, according to Reuters Estimates.
Revenue sank more than 14 percent to about $4.1 billion. Net revenue yields fell 16.4 percent, while costs, including fuel, fell 11.4 percent.
Carnival benefited from a 39 percent drop in fuel costs.
In the fourth quarter, Carnival expects earnings of 16 cents to 20 cents per share. On average, analysts expect 23 cents per share, according to Reuters Estimates.
Filed under: news by Pascal