| Carnival swings from profit to loss

Carnival Corp has posted a firstquarter
loss of US$139m, but
revenue is up 4.8% and Australian
bookings continue to rise.
IN a sign of the current challenges faced by
the company and the cruise industry, Carnival
Corp has slashed its profit forecast almost
in half.
The company reported a Q1 loss of US$139
million, or 18 cents a share, compared to a
profit of US$152 million, or 19 cents a share, in
the same period last year.
Its new earnings forecast for 2012 adjusted
earnings per share is a lower-than-expected
US$1.40-$1.70.
Higher costs from fuel, with prices up 30% in
the quarter, are also threatening to
significantly reduce Carnival’s earnings.
However, revenue for the first quarter rose
to US$3.6 billion, up from US$3.4 billion.
Net revenue yields also increased 2.9%,
better than the company had predicted even
before the Costa Concordia accident.
In December, it had projected net revenue
yields would be up 1% to 2%.
But Carnival lowered its outlook for net
revenue yields to a 2%-to-4% decline this year
on a constant-dollar basis.
On a conference call with analysts, Carnival
executives said safety concerns after the
Concordia and Allegra incidents were no
longer a major obstacle to selling cruises, and
instead it was consumers’ expectations that
prices would fall.
“Any consumers holding out for deeper-thannormal
discounts may be disappointed,”
chairman and ceo Micky Arison said recently.
Chief operating officer Howard Frank said
booking trends in Jan before the Concordia
incident had been “quite strong,” driven by
North American brands’ higher booking
volumes at higher pricing.
Bookings were up for the company’s
Australian brands, he said, as well as in Asia
and Europe, but European brands expect
slightly lower yields because of the region’s
economic slowdown.
On a fleet-wide basis, bookings for the last
seven weeks were down in a “mid-to-highsingle-
digit percentage” at slightly lower
prices.
Costa bookings were down at least 80%
compared to a year earlier, in the first weeks
after the accident; however, during the last
three weeks to 4 Mar, bookings were 40% to
50% lower, with no marketing.
Frank said the company is recommencing
marketing for Costa in some markets and it
expects it will take about a year for booking
trends to stabilise.
He said Costa’s short-term strategy is to
minimise discounting and, if necessary,
operate at reduced occupancy levels.
“As time passes, we are confident that our
business will improve,” he said.