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."
___
This report was updated on Thursday evening.