Carnival Profit Beats Estimates Amid Cautious 2015 Forecast

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Carnival Corp., the world’s largest cruise operator, posted second-quarter profit that beat analysts’ estimates and raised the low end of its 2015 earnings forecast, saying bookings are running well ahead of last year.

Profit last quarter rose to 25 cents a share, excluding some items, from 9 cents a year earlier, the Miami-based company said Tuesday in a statement. That beat the 16-cent average of 17 estimates compiled by Bloomberg.

The shares fell after the results were announced, ending down 0.9 percent to $49.48 at the close in New York. Some analysts thought Carnival should have increased its 2015 earnings forecast by a larger amount. The company now expects full-year earnings of $2.35 to $2.50 a share, up from a range of $2.30 to $2.50 in April.

“We are inclined to be cautious about any ‘set low to beat’ expectations,” Ian Rennardson, who follows the company at Jefferies International in London, said in a research note.

Revenue for the quarter ended May 31 shrank 1.2 percent to $3.59 billion from $3.63 billion a year earlier.

Carnival and other cruise lines have shifted ships to the Caribbean from the Mediterranean in recent years to counter weak European economies. That’s increased capacity in the U.S. market and pressured ticket prices. The company also said currency fluctuations cut second-quarter earnings by 10 cents a share.

CEO Interview

Since taking over as chief executive officer in July 2013, Arnold Donald has revamped Carnival’s marketing and customer service, commissioned new ships and worked to counter damage to its brands from highly publicized mishaps, including the 2012 wreck of the Costa Concordia off the coast of Italy, which killed 32 people.

In an interview, Donald said investments in Carnival-branded ships, including new restaurants, nightclubs and activities for kids, boosted revenue per room on that line to near their 2008 peak. Costa, which operates mostly out of Europe, continues to be challenged by the weak economy there.

The Caribbean represented 34 percent Carnival’s capacity last year, according to a regulatory filing. The company this month introduced fathom, a new line aimed at customers who want to do good while they sail. The first itinerary next year will include a stop in the Dominican Republic, where guests can plant trees or teach English before returning to the ship.

Initiatives such as fathom are based on research the company does on customers’ purchases, Arnold said.

“We do that across all brands,” he said. “We constantly cater to that.”

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