Tourism & Cruises

Carnival reduces forecast. Cuba travel ban and Europe’s economy get the blame.

Miami-based cruise company Carnival Corp. expects per share earnings for 2019 to drop due to concerns about the European economy, Cuba restrictions and mechanical problems with one of its ships.
Miami-based cruise company Carnival Corp. expects per share earnings for 2019 to drop due to concerns about the European economy, Cuba restrictions and mechanical problems with one of its ships.

Carnival Corporation stocks fell sharply Thursday after the Miami-based cruise company cut its full year profit forecast.

In an earnings call Thursday, Carnival Corp. said it expected per-share earnings for 2019 to drop from $4.35-$4.55 to $4.25-$4.35 due to concerns about the European economy, Cuba travel restrictions and mechanical problems with one of its ships. Carnival Corp. is the largest cruise company in the world and the owner of nine cruise lines.

Chief Executive Officer Arnold Donald said the economic recession in Italy, “yellow vests disruptions” in France, and the reopening of vacation spots in Turkey and North Africa have made it hard for Carnival Corp. to compete.

“Recent booking trends have been impacted by ongoing geopolitical and macroeconomic headwinds affecting our Continental European brands,” said CEO Arnold Donald on the call.

Donald also blamed mechanical problems aboard its Galveston, Texas-based ship Carnival Vista that require it to sail more slowly and the new Trump administration regulations banning cruise companies from going to Cuba for the deflated estimate.

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“The reality is Cuba is gone for the foreseeable future and so it didn’t add into plans for next year,” said Donald. “And therefore, that higher-yielding itinerary is off the table.”

Arnold did not mention the company’s $20 million settlement with federal prosecutors for violating its probation in a federal criminal case earlier this month. The fine represents less than 5 percent of Carnival Corp.’s reported second-quarter profit of $457 million.

At Thursday’s close, Carnival Corp. shares were down 7.65 percent, to $48.80. Shares for Miami-based competitors Royal Caribbean Cruises International and Norwegian Cruise Line Holdings — the second and third biggest cruise companies in the world, respectively — also slid. Royal Caribbean shares closed at $118.74, down 3.19 percent, and Norwegian shares closed at $52.56, down 2.5 percent.

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Taylor Dolven covers the tourism industry at the Miami Herald, where she aims to tell stories about the people who work in tourism and the people who enjoy it. Previously, she worked at Vice News in Brooklyn, NY, where she won a Front Page Award from the Newswomen’s Club of NY for a national investigation of police shootings.

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