Carnival shares sink as cruise operator downgrades EPS guidance

Carnival shares sank on Thursday after the cruise operator downgraded its annual earnings per share guidance as it pointed to the US government's ban on cruises to Cuba.

The company downgraded its guidance for 2019 adjusted earnings per share to between $4.25 and $4.35 from between $4.35 and $4.55. Carnival attributed the lower earnings guidance in part to the US government's policy change on travel to Cuba, which it said has had a financial impact of $0.04 to $0.06 per share.

"While the company was able to quickly adjust its itineraries to provide guests with attractive alternative vacation experiences, the suddenness of the regulatory change to this high yielding destination has led to a near-term impact on revenue yields," it said.

On the plus side, revenue at Carnival rose to $4.84bn from $4.36bn, coming ahead of consensus expectations of $4.54bn. Meanwhile, second-quarter adjusted EPS slipped to $0.66 from $0.68 in the same period a year ago, but this was still ahead of expectations of 61 cents.

Chief executive officer Arnold Donald said: "Second quarter earnings included revenue growth from higher capacity and improved onboard spending, more than offset by a drag from fuel and currency compared to the prior year. Second quarter adjusted earnings were better than March guidance by $0.08 per share substantially due to the timing of expenses between quarters."

At 1225 BST, the shares were down 7.9% at 3,716p.