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Carnival Earnings Beat Estimates on Higher Ticket Revenue

The Carnival Glory
The Carnival Glory cruise ship passes the west side of Manhattan along the Hudson River. Photographer: Andrew Harrer/Bloomberg

Carnival Corp., the world’s largest cruise operator, posted fourth-quarter profit that beat analysts’ estimates, benefiting from higher ticket revenue and more onboard spending by passengers.

Profit excluding some items was 4 cents a share, the Miami-based company said today in a statement. That topped the break-even average of 16 analysts’ estimates compiled by Bloomberg. Sales rose 2.2 percent to $3.66 billion in the quarter ended Nov. 30, compared with the $3.53 billion average of estimates.

Chief Executive Officer Arnold Donald cited ticket prices and onboard spending that exceeded expectations. Revenue was also better than anticipated due to initiatives to win back business after a string of accidents at sea forced price cuts this year. The initiatives included a new national marketing campaign, outreach to travel agents and a guarantee that guests will be satisfied with their cruise.

“We have so far experienced a faster recovery for the Carnival brand than our team anticipated,” Donald said on a conference call today. “The advertising campaign for Carnival helped all brands.”

The cruise operator has been in repair mode after accidents over the past two years that included the wreck of its Costa Concordia off the Italian coast in January 2012 and a fire onboard the Triumph in the Caribbean in February.

Stock Gains

Chairman Micky Arison stepped down as chief executive officer in July, after the company announced a $700 million investment in shipboard fire prevention and backup power systems. A $25 million marketing campaign was introduced in September to win over customers skittish of cruising.

Carnival rose 2.5 percent to $38.05 at the close in New York, the biggest gain since Nov. 6. The stock is up 3.5 percent this year.

Passengers rose 3.3 percent to 2.5 million in the quarter. Ticket revenue advanced 1.4 percent to $2.7 billion while onboard revenue increased 3.9 percent to $929 million.

Net income in the fourth quarter fell 29 percent to $66 million, or 8 cents a share, from $93 million, or 12 cents, a year earlier, Carnival said today.

In September, the company said fourth-quarter results, excluding items, would range from a loss of 3 cents a share to to a profit of 3 cents, as a result of lower revenue and higher expenses.

Annual Forecast

For the first quarter, Carnival expects a per-share loss, excluding some items, of 7 cents to 11 cents, according to the statement. That compares with profit of 9 cents a share in the same period a year earlier.

Full-year profit, excluding some items, will be $1.40 to $1.80 a share, the company said. Analysts project $1.57, the average of 26 estimates compiled by Bloomberg.

The annual earnings guidance is “better than investors were anticipating,” Stifel Nicholas analyst Steven Wieczynski wrote in a research note today. He rates the stock a buy.

“Management noted full company 2014 booking volumes are running behind last year but pricing is in line, which is probably more important right now,” he said.

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