Carnival Corp (CCL) -) shares moved lower Friday after the cruise line operator posted stronger-than-expected third quarter earnings, a record high revenues, but issued a muted near-term profit outlook.
Carnival swung to an adjusted profit of 86 cents per share over the three months ending in August, the group's fiscal third quarter, with revenues surging 60% from last year to an all-time high of $6.9 billion thanks to the ongoing boom in post-Covid travel that has supported airline traffic and rival cruise operators for much of the year.
Looking into the current quarter, however, Carnival said it sees adjusted earnings in the region of a loss of 18 cents per share to a profit of 10 cents per share, compared to the Refinitiv forecast of 10 cents.
"Both revenue and earnings significantly exceeded expectations this quarter enabling us to take up expectations for the year," said CEO Josh Weinstein. "The outperformance was driven by strength in demand, with both our North America and Australia segment and Europe segment equally outperforming expectations."
"It is gratifying to see the power of our portfolio deliver, as our continental European brands have stepped up nicely," he added. "Our demand generation efforts are working across all regions, as we have consistently been achieving quarterly net per diems well in excess of 2019 levels, while closing the occupancy gap by 11 points over the course of the year."
"I continue to be encouraged with our revenue trajectory heading into next year as we see no signs of slowing from our consumers," Weinstein said.:
Carnival shares were marked 7.8% lower in early afternoon trading Friday trading to change hands at $13.32 each.
The group's biggest input cost, however, is likely to pressure margins as the rise in global oil prices pushes Brent crude closer to the $100 mark while U.S. WTI crude tests the highest levels since November of last year.
Carnival cautioned in June that higher ticket prices may not offset the impact of risking marketing and labor costs, as well as fuel, telling investors that is forecast a full-year loss of between 8 cents and 20 cents per share.
That will leave investors to focus keenly on both the group's ticket price increases, as well as its onboard revenue increases for the third quarter earnings call.
Carnival management, in fact, said it would take a $130 million hit over the fourth quarter as a result of higher oil prices and a firmer U.S. dollar, which traded at a 10-month peak against its global peers earlier this week.
"We do expect adjusted cruise costs without fuel to be at the high end of our previous guidance range, but somewhat mitigated by the favorability in fuel consumption," said CFO David Bernstein
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