Carnival Earnings Top Expectations

By Chelsey Dulaney 

Carnival Corp. posted sharply better-than-expected earnings in its February quarter as fuel costs tumbled and onboard spending improved.

Shares gained 5.3% in morning trading to $46.75.

Still, the company gave a soft earnings forecast for its current quarter and lowered the top end of its full-year guidance as it struggles with the impact of foreign exchange impacts.

Carnival has said lower fuel costs are helping to offset foreign exchange effects. In the latest quarter, fuel prices fell 38% as consumption fell 3.7% from the prior-year period.

The cruise ship company, which operates Carnival Cruise Lines as well as the Princess, Cunard and Holland America lines, among others, has benefited in recent quarters on broad-based booking strength and firmer pricing.

Carnival said Friday that advance bookings for the remainder of the year are ahead of the prior year and at higher prices.

Overall, for the period ended Feb. 28, Carnival swung to a profit of $49 million, or 6 cents a share, compared with a loss of $20 million, or 3 cents a share, a year earlier.

Excluding fuel derivative costs and a gain on a ship sale, per-share earnings were 20 cents a share. Carnival had expected to post per-share earnings of 7 cents to 11 cents.

Revenue edged down 1.5% to $3.53 billion. Analysts polled by Thomson Reuters had expected $3.57 billion in revenue.

Passenger ticket revenue, the largest top line contributor, fell 3.5%. Onboard spending, meanwhile, grew to $889 million from $850 million.

Net revenue yields--a measure of revenue relative to capacity--improved 2%, excluding currency fluctuations, topping Carnival's expectations for flat to a 1% increase. Net cruise costs, excluding fuel and currency fluctuations, increased 2.4%, compared with forecasts for an increase of 5.5% to 6.5%.

For the year ending in November, Carnival lowered the top end of its earnings forecast by a dime, now calling for per-share earnings of $2.30 to $2.50. Carnival said foreign exchange has reduced its outlook by 28 cents a share since December.

Still, the company raised its target for net revenue yield growth, excluding foreign currency effects, to 3% to 4%, up a full percentage point above its December guidance.

For the current quarter, Carnival said it expects to post per-share earnings of 11 cents to 15 cents, below the 26 cents a share analysts polled by Thomson Reuters had expected. Net revenue yields are expected to grow 2% to 3% in the quarter, while net cruise costs are expected to be up 6.5% to 7.5%.

Write to Chelsey Dulaney at [e-mail]

Access Investor Kit for Carnival Plc

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=GB0031215220

Access Investor Kit for Carnival Corp.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=PA1436583006

Access Investor Kit for Carnival Plc

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US14365C1036

Subscribe to WSJ: http://online.wsj.com?mod=djnwires