Carnival Falls Most in 16 Months on Lower Profit Forecast
Carnival Corp. (CCL) fell the most in more than 16 months after the world’s largest cruise operator lowered its forecast for the rest of the year, saying price cuts undertaken following a series of mishaps will hurt margins.
Carnival dropped 5.2 percent to $33.47 at 9:45 a.m. in New York and earlier fell 6.8 percent for the biggest intraday decline since Jan. 17, 2012, after delivering the lower view for the second half of 2013 yesterday. Before today, the shares had fallen 3.9 percent this year while the Standard & Poor’s 500 Index added 17 percent.
The lower forecast demonstrates the continuing fallout from several incidents at sea involving ships operated by Miami-based Carnival that attracted news coverage. They included an engine-room fire on the Triumph in February that left 3,100 passengers with limited food and toilet service for several days.
Full-year profit will total $1.45 to $1.65 a share, Carnival said yesterday in a statement. That’s down from a previous forecast of $1.80 to $2.10. Analysts were projecting $1.99, the average of 27 estimates compiled by Bloomberg.
The company began cutting prices to fill cabins, dropping the fare for some trips in April to as little as $38 a night per person. While bookings increased, the amount of revenue captured from each customer has declined, Carnival said yesterday. Cancellations were also higher than expected, the company said.
Higher fuel and marketing costs, as well as less-favorable exchange rates, will also crimp profit, the company said.
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