CRUISE INDUSTRY

Carnival earnings beat fourth-quarter expectations

 

hsampson@MiamiHerald.com

Carnival Corp. closed out a rough year with some better-than-expected results.

Although profits fell for the fourth quarter and fiscal year compared to 2012, the Miami-based cruise operator beat analyst expectations and its own projections.

The company said Thursday the strong financial performance was due to higher ticket prices and on-board spending on ships in the Carnival Cruise Lines brand. The “Fun Ships” — and the parent company — have struggled since fire disabled the Carnival Triumph earlier this year, leaving passengers stuck on board without working toilets, hot water or air conditioning.

Since the February ordeal, Carnival has announced $700 million in fleet-wide fixes, discounted tickets to attract more customers and taken several measures to restore confidence in the namesake brand.

“We have so far experienced a faster recovery for the Carnival brand than originally anticipated and our team is working very hard to keep that momentum going,” said CEO Arnold Donald, who has held the position since former CEO and current chairman Micky Arison stepped down in July. He said that while brand perception has already improved significantly, the outlook is still hazy.

“We maintain a level of caution and are focused on identifying additional signs that the pace of recovery we’re experiencing is in fact sustainable,” Donald told analysts.

Carnival reported net income of $66 million for the quarter that ended Nov. 30, down from $93 million in 2012. For fiscal 2013, the company made $1.1 billion in profit, a drop from $1.3 billion last year.

Revenues for the full year were up slightly to $15.5 billion; for the quarter, revenues increased more than 2 percent to $3.7 billion.

But while fuel costs were down, other expenses including a major advertising campaign increased more than expected for the quarter. Overall, net revenue yields — revenue made per berth per day — were down more than a percent for the quarter and 2 percent for the year.

So far, advance bookings for 2014 are lagging behind the previous year at similar prices. Based on the trends the company sees now, officials expect yields for 2014 to be in line with the previous year.

Carnival’s stock got a boost from the results, closing up more than 2.5 percent at $38.05.

The news was welcome for Carnival, which has been back in the media glare with a CNN report this week that said the company was aware of the potential fire hazard on the Triumph. The report was based on a lawsuit filed by passengers who were on the infamous “poop cruise.”

Responding to a question about the report during Thursday’s call, Donald insisted that the company’s ships “are safe, they’re sound and they’re seaworthy and we’ve always stood behind our product and will continue to do so.”

“It’s a frivolous suit,” he added. “I’m disappointed it got any air time whatsoever.”

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