Carnival Doubles 2Q Profit But Warns of Trouble in the Caribbean

By Features FOXBusiness

Carnival (CCL) doubled its second-quarter profit and surpassed expectations on Tuesday, however its shares slid after the cruise giant issued a disappointing outlook for the current quarter and warned of challenges in the Caribbean.

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The Miami-based cruise operator reported GAAP net income of $106 million, or 14 cents a share, compared with a year-earlier profit of $57 million, or 7 cents.

Excluding a one-time $15 million benefit related to a vessel sale and other gains from fuel derivatives, Carnival said it earned $80 million, or 10 cents a share, topping average analyst estimates of two cents in a Thomson Reuters poll.

Revenue for the three-month period was $3.6 billion, up from $3.5 billion in the year-earlier period, matching the Street’s view.

"We benefited from effective marketing initiatives, which combined with a gradually improving economic environment, led to revenue yield improvement for our continental European brands,” Carnival CEO Arnold Donald said in a statement.

The cruise operator warned that fleetwide booking volumes for the next three quarters are running slightly behind last year at higher prices, especially amid intense competition in the Caribbean, however advanced bookings for the remainder of 2014 are slightly ahead of 2013.

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“Collectively our brands are gaining momentum in our efforts to drive higher ticket prices and we continue to expect sequential improvement in revenue yields, despite a more competitive environment in the Caribbean this summer,” Donald said.

This in mind, Carnival raised its fiscal 2014 non-GAAP earnings guidance to a range of $1.60 to $1.75, above $1.58 a share in 2013, and in-line with the consensus view of $1.71. It expects revenue to be higher year-over-year, but did not say by how much.

For the third quarter, it anticipates non-GAAP earnings between $1.38 and $1.44 a share, below average analyst estimates of $1.51.

Shares of Carnival closed down about 3% to $38.23 on Tuesday but are up a little bit shy of 15% over the last 12 months.

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