With a profitable fiscal year wrapped up, Carnival Corp. on Friday said that it has ordered two new ships.
The Doral-based company announced the order from ship builder Fincantieri on the same day it released fourth-quarter and full-year earnings for fiscal 2014.
Carnival reported $1.2 billion in profits on revenues of $15.9 billion for the year that ended Nov. 30. That’s up from $1.1 billion in net income and $15.5 billion in revenues last year.
“We’re very pleased with our results for 2014, but of course we’re never satisfied,” Carnival Corp. CEO Arnold Donald said in an interview Friday.
During the fourth fiscal quarter, the company posted a loss of $102 million mostly because of unrealized losses in fuel derivatives of $277 million. Without those losses and $35 million in other charges, the cruise company would have posted a profit of $210 million. Revenues were up more than 1 percent to $3.72 billion.
While revenues missed analyst expectations for the quarter, adjusted earnings per share of $.27 beat expectations.
The company said it expects costs for the new fiscal year to be up about 3 percent, mainly because more ships are scheduled for dry-dock maintenance and upgrades including installation of fuel exhaust scrubbers and new fuel efficiency technology.
Carnival did not disclose how much it will pay for the new ships. The order includes a 3,954-passenger vessel for Carnival Cruise Line and a 2,650-passenger ship for Holland America Line. Both are due in 2018.
Shares closed at $44.79, up less than 1 percent. Cruise stocks also got a boost Wednesday when President Barack Obama announced plans to make travel to Cuba easier for Americans. Though cruise lines cannot immediately enter the market, industry insiders see huge potential for the cruise industry once the embargo is lifted.
“There’s no question if the legislative embargo is lifted, Cuba is a tremendous opportunity,” Donald told analysts during a call Friday. “There’s a lot of pent-up demand to visit Cuba. It would allow us some very fuel-efficient itineraries.”
He said about 11 ports in the country can accommodate various ships in Carnival’s 100-ship fleet.
“There will be investment in ports and other infrastructure required over time should the legislative embargo be lifted,” Donald said. “We are excited about the prospects for Cuba and it would definitely create the demand that we need to have the relative scarcity to drive yields.”
Friday’s news came at the end of a busy week for Carnival. On Wednesday, the company announced that it had hired Cruise Lines International Association president and CEO Christine Duffy to lead the Carnival Cruise Line brand.
In a phone interview, Donald called Duffy a “great front-of-house” person whose “natural people instincts” will help the line win over customers and travel agents.
“The Carnival brand being a social brand is a reflection of her own personality,” he said. “That energy and the skills she brings will help us create demand.”