Financial Performance

Carnival Posts Record Earnings, Rosy Outlook

"Our record results, coupled with strong booking trends, have more than offset the anticipated earnings impact" from hurricanes, CEO Arnold Donald ...
Matthew HellerSeptember 26, 2017

Carnival Corp. shares jumped on Tuesday after the world’s largest cruise ship operator reported better-than-expected quarterly earnings and offered a positive outlook despite the hurricanes in the Caribbean.

For the third quarter, Carnival’s revenue climbed 8% to $5.5 billion, its strongest growth in six years. Net income declined to $1.33 billion, or $1.83 per share, from $1.42 billion, or $1.93 per share, but on an adjusted basis, Carnival earned a record $1.66 billion, or $2.29 a share.

Analysts had forecast adjusted earnings of $2.20 a share on revenue of $5.39 billion.

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The results also showed Carnival passengers are paying more for their cabins as gross revenue yields — the most popular metric for assessing a cruise line’s health — rose 5.5%. In trading Tuesday, the company’s shares were up 3% at $65.70.

“We delivered another consecutive quarter of strong operational improvement and another third quarter adjusted earnings record,” CEO Arnold Donald said in a news release. “Our ongoing efforts to create demand well in excess of measured supply growth helped to drive five percent higher cruise ticket pricing.”

As the Sun Sentinel reports, Hurricanes Harvey, Irma and Maria have forced many cruise lines to relocate ships or shorten itineraries to avoid the massive storms and bypass severely impacted ports.

Carnival expects to take a fourth-quarter hit of about 10 to 12 cents a share from “voyage disruptions.” But the weather doesn’t seem to have dampened its optimism.

“Our record results, coupled with strong booking trends, have more than offset the anticipated earnings impact from these weather disruptions, enabling us to raise the mid-point of our guidance and positioning us to achieve the higher end of our previous earnings guidance range,” Donald said.

CFO David Bernstein said there has been a slowdown in Caribbean bookings, but that is expected to pick up again as word spreads that most of the region is unaffected.

“The challenges are real, and storms continue to threaten Carnival’s operations,” The Motley Fool said. “However, Carnival continues to make the most of its market-leadership position and its fleet of 103 ships.”