The world’s largest cruise ship company is having a big month — following a monumental Cuba announcement, Carnival Corporation is reporting better-than-expected quarterly profits.
According to a report released Wednesday, Carnival Corp. surpassed analyst predictions for revenues and profits in the first quarter of 2016, ending Feb. 29.
Buoyed by lower fuel costs and higher pricing in areas like the Caribbean, the Doral-based cruise company reported revenues at $3.65 billion, compared to $3.5 billion in the same period last year, beating forecasts of $3.62 billion by Zacks Investment Research.
Net income nearly tripled from $49 million, or 6 cents, in the first quarter of 2015, to $142 million, or 18 cents, in 2016. Earnings per share about doubled to 39 cents, surpassing analyst forecasts of 31 cents.
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“Our company is off to a strong start this year,” Carnival Corp. president and CEO Arnold Donald told investors in a Wednesday morning call.
Carnival Corp. owns 10 brands: Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, AIDA Cruises, Costa Cruises, Cunard, P&O Cruises, P&O Cruises Australia and its newest brand, traveling to Cuba in May, Fathom.
$3.65 billion Carnival Corp.’s revenues for the first quarter of 2016, up from $3.5 billion during the same period in 2015.
Part of Carnival Corp.’s success is a decrease in costs coupled with strong bookings, Donald said. Gross cruise costs, including fuel, were down 6 percent. Fuel expenses alone were nearly half of what they were during the first quarter of 2015, at $187 million, compared to $318 million.
Prices for cruises are also up in North America and Europe. The Caribbean itineraries, which represent almost half of the cruise company’s deployments during the first quarter, have seen the biggest pricing jumps as its lines have adjusted inventory in the region.
Europe, too, continues to do well despite geopolitical turmoil in the area, Donald said.
“Europe for the last several years has had some headwinds, from uneven economies to geopolitical matters,” Donald said in an interview. “Despite those characteristics we’ve continued to grow and do well there in terms of operating results — even in that environment we can perform.”
The emerging Chinese market — small in comparison to deployments elsewhere in the world — is growing passenger counts more quickly than other regions. Carnival deploys six ships in China — the most of any cruise company — with plans to add more.
Donald said he expects the Chinese market to continue contributing to the company’s growth this year.
$142 million Carnival Corp.’s net income for the first quarter of 2016, nearly triple what it was in 2015.
Carnival reported it is projecting earnings will range from 34 cents to 38 cents for the second quarter of 2016. The company increased its expected adjusted earnings for the year to $3.20 to $3.40 per share, up 10 cents from $3.10 to $3.40 per share.
But the company’s biggest announcement this year — gaining approval to sail to Cuba from the U.S. — is not expected to have a big financial impact. That’s because its 704-passenger Adonia, scheduled to split itineraries between Cuba and the Dominican Republic, is a small part of Carnival’s 100-ship enterprise.
“But that’s not the point,” Donald said. “Most importantly, we are gaining experience in working with Cuba so we can prepare the way once a larger volume of cruising takes place.”
He said each of Carnival’s brands is interested in adding Cuba to its itineraries in the future.
“Over time that is going to be tremendous refresher for the Caribbean,” Donald said.
Shares of Carnival Corp. closed at $52.37, up 5 percent.