Investors send Carnival to the bottom after company cuts full-year guidance
Investors marked down shares of Carnival after the cruise line operator cut its guidance for full-year earnings per share, blaming higher fuel costs and headwinds in currency markets for the shortfall.
Carnival
1,077.50p
16:40 26/04/24
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17:09 26/04/24
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Company boss Arnold Donald said Carnival remained on course to deliver double-digit earnings growth and a higher return on invested capital "over time" and that earnings per share were still rising from the prior year level.
Indeed. But now less so.
For the full-year, Arnold was now expecting earnings per share in a range of $4.35-4.55, versus $4.50-4.80 previously and the $4.26 achieved in 2018, estimating that fuel price and currency headwinds would knock $155m or 22 cents per share off the company's bottom line.
Net revenue yields were still seen growing by about 1.0% over the course of fiscal year 2019, which as analysts at Morgan Stanley had pointed out in a research note to clients, was significantly less than growth of 7.5% and 3.5% projected by rivals Royal Caribbean and Norwegian Cruise Lines, respectively.
It was a similar story for the quarter ahead, with Carnival telling shareholders to expect EPS of $0.56-0.60, which was considerably less than the $0.65-0.70 that some analysts on the Street had penciled-in.
Net revenue yields were seen in-line with year-earlier levels, against an estimate from Morgan Stanley for an increase of 0.5-1.5%
The company did however manage to beat analysts' estimates for the first three months of the year by a handsome margin.
For the three months just ended, adjusted earnings per share declined by 5.7% from the year earlier level to reach $0.49, even as the company's top line increased by 11.9% to $4.7bn, with the latter boosted by higher capacity and onboard spend, offset by the timing of cost increases and dearer fuel prices.
Analysts at Morgan Stanley had anticipated first quarter EPS of just $0.39, versus company guidance for $0.40-0.44, driven by higher fuel costs, with the broker pointing out management's practice of not hedging fuel prices.
As of 1351 GMT, shares of Carnival were down by 6.53% to 3,880.0p.
-- More to follow --