Carnival Corp shares sink as cruises operator cuts its 2019 profit forecast for the third time this year citing higher fuel prices

Carnival Corp (NYSE:CCL) (LON:CCL) saw its shares sink on Thursday after the cruises operator cut its 2019 profit forecast for the third time this year citing higher fuel prices and an ongoing economic malaise, although its record third-quarter earnings beat expectations.

The dual-New York and London listed company said it now expects its 2019 adjusted earnings to be between $4.23-$4.27 per share, down from its earlier forecast of $4.25-$4.35 per share, compared to 2018 adjusted earnings per share of $4.26.

READ: Carnival sinks as Cuba travel ban and cruise ship repairs force it to slash guidance

The gloomy outlook overshadowed better-than-expected sales and profit numbers for the third quarter ended August 31.

Carnival saw its third quarter revenue increase by around 12% to $6.53 billion, from $5.8 billion at the same stage in the prior year, above the consensus forecast for $6.17 billion.

The Miami-based company’s quarterly adjusted net income was $1.8 billion, or $2.63 per share, up from $1.7 billion, or $2.36 per share for the third quarter of 2018, and ahead of the average estimate of $2.53 per share.

In a statement, the firm’s chief executive officer Arnold Donald commented: “As a truly global cruise company, with nearly 50% of our guests sourced outside of the US, we are facing a number of current headwinds, including weakening economies affecting our Europe & Asia segment, a strong dollar and of course, the IMO 2020 regulations, and we are working to mitigate them.”

He added: ”We have taken actions to bring capacity in Southern Europe more in line with demand, reflecting the current conditions which have been heavily influenced by ongoing economic malaise, the uncertain geopolitical environment and recent trends in consumer confidence. We have also made close-in deployment changes, including those made to address the recent situation in the Arabian Gulf, which has had an impact on recent booking trends and ticket prices.”

Looking ahead to 2020, Carnival said its cumulative advanced bookings for the first half of 2020 are ahead of the prior year at prices that are in line compared to 2019 on a comparable basis.

However, it added, since June, both booking volumes and prices for the first half of next year have been running lower than the prior year.

In response, Carnival shares in New York were 7.5% lower at $44.47, while in London, the FTSE 100-listed firm’s shares were down 7% at 3,400p.

Contact the author at [email protected]

Story by ProactiveInvestors