Carnival Corp. cruised to a profit for the first fiscal quarter thanks, in part, to increased onboard spending and cheaper fuel.
The Doral-based cruise giant Friday reported profits of $49 million for the quarter that ended Feb. 28 compared to a $20 million net loss for the same time a year earlier. Excluding items such as unrealized losses on fuel derivatives, adjusted net income was $159 million, or 20 cents per share — far higher than the company or Wall Street had expected.
The average of estimates compiled by Bloomberg showed that analysts projected earnings of 9 cents a share.
“We are off to a strong start,” Carnival Corp. president and CEO Arnold Donald said during a conference call with analysts. The company has nine brands with 101 ships sailing around the world.
Advance bookings for the rest of 2015 are ahead of where they were last year at higher prices. While the Caribbean remained competitive as expected in the first quarter, the company said yields — or the amount spent per berth per day — in that region were likely to be up for the rest of the year.
Revenues actually dipped from about $3.6 billion to just over $3.5 billion, but fuel prices dropped 38 percent, which boosted the bottom line.
Excluding fuel, net costs increased 2.4 percent on a constant dollar basis due to higher maintenance and advertising expenses. But Donald pointed out that some of that advertising included a spot during the Super Bowl, which resulted in more than 10 billion media impressions.
“Almost anything good happens, we blame it on the Super Bowl ad,” Donald said during the call. “If the food in the cafeteria’s good, we say ‘Hey, it’s the Super Bowl ad.’ ”
Morningstar analyst Jaime Katz wrote in a note to investors that the company’s outreach efforts — including the ad, the highly publicized naming ceremonies surrounding a new ship for the P&O Cruises brand and others — have increased the lines’ global profile.
“In our opinion, the focus on public relations has helped build brand awareness and drive demand over the first quarter, as well as continue to support bookings over the remainder of the year,” she wrote.
Onboard spending was also bright spot in the quarter, increasing 4.6 percent.
Donald said passengers spent more in casinos, bars, restaurants and on services such as Wi-Fi on ships across the fleet.
“It’s clearly not only tied to consumer response from economic improvements, because it’s everywhere,” he said. He attributed some of the increase to the company’s brands sharing ideas and best practices.
For the full year, the company said it expected changes in currency exchange rates to be a drag on profits, though executives said improvements in other areas would make up for much of that negative impact. Carnival reduced its 2015 earnings forecast to $2.30-$2.50 per share from the previously announced estimate of $2.30-$2.60. Including the impact of currency, Carnival expects yields to be about 2 percent higher than in 2014.
Shares closed at $47.12 Friday, up more than 6 percent from the previous day’s close.
The earnings news came a day after Carnival announced it had signed agreements with two shipyards for nine new ships between 2019 and 2022. Donald wouldn’t reveal much about the plans for those ships, except to say that some would be purpose-built for the fast-growing China market.
“We are well positioned for future growth. China expects to surpass one million cruise passengers in 2015 and nearly 50 percent of those will travel on a Carnival Corp. ship,” he said. “It’s just a matter of time before China becomes the largest cruise market in the world.”