Sponsored Listings:
Carnival Corp. reported lower earnings for its second quarter ended May 31 and reduced its profit outlook for 2019.
Net income fell year over year to $451 million from $561 million. When adjusted for various special factors, earnings fell to $457 million from $489 million, Carnival said. Revenue for the period was $4.8 billion, up from $4.4 billion.
Carnival cited a variety of problems in lowering its 2019 profit outlook to $2.93 billion to $3 billion. The previous range had been $3 billion to $3.14 billion. Factors were a propulsion problem affecting the Carnival Vista, cuts related to the abrupt cancellation of voyages from the U.S. to Cuba and expected reductions in yields for the remainder of 2019 because of challenges in the European market.
In comments in a conference call with analysts to discuss the results, Carnival Corp. CEO Arnold Donald cited “heightened geopolitical and macroeconomic headwinds,” for troubles at European source brands such as AIDA and Costa Cruises, in combination with double-digit capacity increases.
“Growing into a contracting travel market has put pricing pressure on ticket prices this year,” Donald said.
In southern Europe, Donald said the reopening of lower-priced land competitors in North Africa and Turkey was a factor in reducing demand for cruises. Carnival Corp. CFO David Bernstein said the recessionary effects in Italy and southern Europe this year surprised Carnival in the same way they did the European Central Bank.
Donald said Carnival was “evaluating ways to optimize future performance including accelerating demand and right-sizing capacity.”
He said Carnival was planning increases “in our investment in demand creation in the back half of the year,” which he said would be offset by cost savings in other areas.
Carnival shares were down about 8% in late trading on Thursday.
Carnival said “cumulative advanced bookings for the remainder of the year are slightly ahead of the prior year at prices that are in line with the prior year on a comparable basis. Pricing on bookings taken since March have been running behind the prior year on lower booking volumes, in part because the company had less inventory remaining for sale. Cumulative advanced bookings for the full year 2020 are well ahead at prices that are in line compared to 2019.”
Donald said, “Recent booking trends have been impacted by ongoing geopolitical and macroeconomic headwinds affecting our continental European brands. We continue to expect higher yields in our North America and Australia brands offset by lower yields in our Europe and Asia brands for the remainder of the year.”
Source: travelweekly.com
