Carnival Corp. failed to impress investors with its initial
forecast of 2019 profit growth, and the cruise company's shares plummeted on Thursday, even
though Carnival reported higher net income for 2018.
Carnival was trading at $49.79 per share, down 9.5%,
at market closing on Dec. 20. Royal Caribbean Cruises Ltd. shares were
off 4.6% and Norwegian Cruise Line Holdings fell 6.4%.
The broader market, as measured by the S&P 500 stock index, was
down 1.6%.
In its 2018 fiscal year ended Nov. 30, Carnival said net
income rose to $3.15 billion from $2.6 billion a year earlier. Revenue rose 7.8%,
to $18.9 billion.
For next year, Carnival forecasted its net income would be
in the range of $3.14 billion to $3.35 billion when adjusted for unrealized
gains and losses on fuel derivatives. The consensus of Wall Street forecasts was for net income of
$3.27 billion.
However, Carnival indicated that fuel and foreign currency
factors were expected to add $98 million to results. Without that, the forecast
would be below the range expected by Wall Street, said Patrick Scholes, analyst
at SunTrust Robinson Humphrey.
Carnival also projected lower first-quarter net income for
2019 than in this year's first quarter, when it earned $375 million on an
adjusted basis. Carnival said net income for the quarter ending Feb. 28 would
be in the range of $279 million to $307 million.
Carnival CEO Arnold Donald said investors shouldn't focus
too much on revenue yields, which aren't expected to grow as fast as in prior
years.
"Based on continued strength in underlying
fundamentals, we are poised to deliver another year of strong revenue and
earnings growth, with booking volumes running significantly ahead of our higher
capacity growth and net revenue yields expected to exceed last year's record
levels," Donald said.