MIAMI (AP):
HIGHER FUEL costs and a sluggish Caribbean cruise market combined to reduce second-quarter profit 2 per cent at Carnival Corp., the world's largest cruise operator reported Friday.
Net income for the quarter ended May 31 was US$380 million, or 46 cents per share, compared with last year's second-quarter profit of $388 million, or 47 cents per share. Wall Street analysts surveyed by Thomson Financial had forecast profit of 44 cents a share, on average.
While revenue rose 6 per cent to $2.66 billion compared with the same period last year, executives at the Miami-based company said fuel costs were about 43 per cent higher. Those high fuel prices are expected to continue through the rest of the year.
HIGH PRICES CUT EARNINGS
Micky Arison, Carnival's chairman and chief executive officer, said higher fuel prices cut earnings by $74 million, or 9 cents per share, in the second quarter.
The company also has experienced a slower market in the Caribbean, particularly in its shorter 3 to 5-day cruises. Arison, however, said in a conference call with analysts that he expected that market to rebound and the company is seeking to boost bookings with "aggressive pricing strategies" in the Caribbean.
"I think we have to be careful in not overreacting to what
historically has been temporary swings in demand," Arison said. "It's too short a trend at this stage to react to, and it's been too good a market for us."
SETBACKS SUFFERED
Carnival and other cruise lines suffered some setbacks because of last year's record Atlantic hurricane season, which damaged key ports in Mexico and New Orleans and depressed some demand. But Howard Frank, Carnival's vice chairman and chief operating officer, said storm anxiety doesn't appear to be a major factor this year for most customers.
Carnival, which operates 80 cruise ships totalling 141,000 berths worldwide, has 16 new ships scheduled to enter
service by 2010. Ten of those are destined for its European market, which is among its most profitable.
"This commitment to future expansion, as well as the authorisation for another $1 billion share repurchase, demonstrates our confidence in the favourable long-term prospects of our global cruise business," Arison said.
