) reported second-quarter fiscal 2013 adjusted earnings of 9
cents per share, ahead of the Zacks Consensus Estimate of 6 cents
per share but lower than the year-ago quarter earnings of 20
cents per share. Lower revenue combined with higher cruise
costs were responsible for the year-over-year earnings decline.
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Total revenue in the quarter slipped 1.7% year over year to
$3,479 million, missing the Zacks Consensus Estimate of $3,596
million. A lower net revenue yield owing to reduced pricing led
to the decline in revenues.
Net revenue yields (in constant currency) declined 1.9% year over
year. Gross revenue yields dropped 3.1%. Net cruise costs (in
constant dollar), excluding fuel per available lower berth day
(ALBD), escalated 8.8% year over year mainly due to the timing of
dry-dock expenses and vessel repair costs. Fuel price was $683
per metric ton in the quarter, down 9.7% year over year while
fuel consumption declined 5.7%.
Passenger Tickets: Passenger Tickets revenues in the quarter
declined 2.3% year over year to $2,613.0 million.
Onboard and Other: In the second-quarter of fiscal 2013, Onboard
and Other revenues were $839.0 million, down 0.6% year over year.
Tour and Other: Segment revenues grew 42.0% year over year to $27
Third Quarter 2013 Guidance
This Miami-based cruise company expects net revenue yield (in
constant dollar) to decline in the range of 3.5% to 4.5% in the
third-quarter of fiscal 2013. Net cruise costs per ALBD (in
constant dollar), excluding fuel, are projected to increase
8.5%−9.5%. The majority of the cost increases will be due to a
new program announced in Apr 2013 to improve its fleet-wide
efficiency and increased marketing expenses.
Based on current fuel prices and currency exchange rates, the
company expects adjusted earnings to be within $1.25−$1.35 per
share in the third quarter, significantly lower than the year-ago
earnings of $1.53 per share.
Full Year 2013 Guidance Retained
Carnival maintained its earlier announced guidance range for the
full year. Owing to the prevailing economic headwinds Carnival
slashed its guidance in May 2013 from $1.80-$2.10 per share to
$1.45-$1.65, anticipating a weak show in the second half of 2013.
Net revenue yields were guided to be down 2-3% as against the
previously announced flat yield guidance.
In the wake of several accidents, Carnival had to resort to
marketing initiatives and price promotions to trigger bookings,
which significantly pulled down the anticipated net revenue
Carnival also expects net cruise costs, excluding fuel per ALBD,
to increase 3.5% to 4.5% on a constant and current dollar basis.
Higher-than-expected voyage cancellations as well as higher
selling and administrative costs led the company to trim its
earnings guidance. The projected earnings range for fiscal 2013
is much below the year-ago earnings of $1.88 per share.
Carnival continuously strives to lower its fuel consumption by
implementing several fuel saving technologies. It is on track to
achieve its target of reducing cumulative consumption by 23% from
2005 through 2013.
Although Carnival is recovering at a modest pace from the Costa
disaster last January, the cruise operator continues to suffer
one accident after another. These catastrophes have not only
resulted in voyage disruptions but also escalated repair costs.
Also, these catastrophes compelled Carnival to invest heavily in
Further, the prevailing economic uncertainty, especially in
Europe poses a major threat for the rest of fiscal 2013. However,
reduction in fuel consumption is one bright spot in Carnival's
Carnival currently carries a Zacks Rank #5 (Strong Sell). Some
stocks in the leisure and recreational services sector that are
performing well include
Six Flags Entertainment Corp.
) carrying a Zacks Rank #1 (Strong Buy) and
Life Time Fitness Inc.
The Madison Square Garden Co.
) both carrying a Zacks Rank #2 (Buy).