Earnings Preview: Carnival Corp.
The Associated Press
06/16/09 - 05:06 PM EDT
KRISTEN A. LEE
NEW YORK (AP) — Carnival Corp., the world's largest cruise operator, reports its fiscal second-quarter results on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: Consumer confidence rose during Carnival's fiscal second quarter, and investors hope that improved sentiment translated into higher cruise fares.
As vacation spending dropped in late 2008, Carnival and rival Royal Caribbean Cruises Ltd. were forced to slash prices to fill their ships. Analysts and investors will look for signs that prices regained some ground during the second quarter.
Rising fuel prices and health concerns also posed new challenges to Carnival during the quarter.
Oil prices have doubled since March to more than $70 a barrel, driven by a weaker dollar and investor optimism that the worst of the global economic slowdown might be over. That increase is more than analysts expected, but oil prices are still well below the historic levels of last summer.
Carnival was affected by the swine flu outbreak during the quarter, when it began redirecting ships away from Mexican ports as fear spread that tourists might pick up the virus in Mexico.
Last month, Carnival said those itinerary changes will reduce the company's second-quarter earnings about 5 cents per share. Carnival said the hit could increase to 10 cents per share for the full fiscal year.
The company earlier forecast second-quarter earnings of 29 cents to 31 cents per share, and fiscal 2009 profit of $2.04 to $2.24 per share.
More recently, Carnival was forced to divert one of its ships to an Australian port after some crew members and passengers were diagnosed with swine flu.
BY THE NUMBERS: Analysts polled by Thomson Reuters expect earnings of 29 cents per share on revenue of $2.99 billion.
ANALYST TAKE: Deutsche Bank analyst Simon Champion said investors will focus on whether Carnival can maintain its full-year earnings guidance, given rising fuel costs, the impact of swine flu and weak cruise pricing.
"We do not as yet see a material pick up in cruise pricing in our pricing surveys despite more positive sentiment generally towards the U.S. economic outlook," Champion said.
WHAT'S AHEAD: Consumer sentiment, oil prices and swine flu are expected to remain wild cards for the near future. UBS Investment Research analyst Robin Farley noted that Carnival has reserved its right to reinstate fuel surcharges if crude prices on the New York Mercantile Exchange exceed $70 a barrel.
Although that has now happened, Carnival has not yet restored the supplement.
STOCK PERFORMANCE: Carnival's shares regained some ground during its fiscal second quarter, rising 30 percent to close the month of May at $25.44. During the past 52 weeks, the shares have lost about 38 percent.
