Carnival Beats Expectations, Europe Holds Up

Open Jaw

Amidst a tumultuous climate and in a U.S. election year like no other, Carnival Corp. is reporting higher than expected Q3 earnings, driven by higher ticket prices and lower fuel costs.

The world's largest cruise operator announced a profit of $1.4 billion in the quarter ending 31AUG. That compared to $1.2 billion in the same period in 2015. Revenue rose 4.4% to $5.1 billion, up from $4.9 billion a year ago.

"This quarter, we delivered the highest quarterly earnings in Carnival Corp.'s history with record net income," President & CEO Arnold Donald told analysts during an earnings call.

From terror attacks in Europe to a mosquito-borne virus in North and South America, the business has faced headwinds. Despite that, Donald says Carnival's 10 cruise brands continued "to outperform, particularly in the Caribbean" with continued strength in pricing for last minute bookings.

Donald was perhaps most pleased to report that Carnival Corp.’s European cruise business also saw improvements in revenue yield despite the geopolitical climate there.

"We are well on track to deliver nearly 25% earnings growth in 2016," Donald said. "Looking forward, our booking trends are strong heading into 2017 with higher occupancy levels at higher prices building momentum for continued earnings growth."

The latest results may help bolster Carnival’s share price, which has underperformed the S&P 500 by some 18 percentage points since early April. The share price is down more than 9% over the past year, as investors appear to be gun-shy about cruise stocks in general, for some of the factors mentioned above.

Carnival Corp. shares slipped 1.67% to $46.47 at close on Monday.

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