Carnival issues profits warning as Covid-19 hits cruises

Carnival Corporation issued a profits warning and scrapped guidance on Friday as the coronavirus pandemic pushed the world's biggest cruise operator to a heavy first quarter loss.

Carnival said the virus, which has led to a global travel slump as operators cancel services and issue refunds, would have a “material negative impact” on its full year financial results and liquidity and also delay ship deliveries.

It said it was cutting costs and capital expenditure and seeking extra financing in a bid to improve liquidity, adding that it had fully drawn its $3bn revolving credit agreement to bolster finances from the impending hit.

Carnival operates ships under the Carnival, Costa, P&O, Princess, Holland America, Seabou and Cunard brands and has suspended temporarily all global voyages. Two of its ships had to dock off their destination ports after some passengers were tested positive for the virus.

On Thursday the company said it was in talks with the US government to offer its vessels as hospital ships for patients with non Covid-19 conditions to help free up hospital beds to cope with the pandemic.

“Given the uncertainty of the situation, the corporation is currently unable to provide an earnings forecast, however it expects a net loss on both a US GAAP and adjusted basis for the fiscal year ending November 30, 2020,” Carnival said in a statement.

The company swung to a first quarter GAAP net loss of $781m, or $1.14 per share compared with net income of $336m, or earnings per share of 48 cents a year earlier.

The impact of Covid-19 on the first quarter's net loss was around 23 cents a share, the company said, which took into account cancelled voyages and disruptions.

For the seven weeks to March 15, 2020, booking volumes for the rest of 2020 were "meaningfully" lower year-on-year as a result of the effects of Covid-19, Carnival said, as were cumulative advanced bookings at prices that were "considerably lower".

"The corporation also believes the effects of Covid on the shipyards where its ships are under construction, will result in a delay in ship deliveries," it said.