Carnival profit falls 20 pct but beats Wall Street

CHICAGO — Cruise operator Carnival Corp. said increased summer bookings from last-minute getaway seekers combined with falling fuel costs to help it beat third-quarter profit forecasts.

But profit still fell from the same period last year for the owner of the Carnival, Princess and Holland America cruise lines.

Executives, who boosted the company’s full-year profit forecast, said business was stabilizing after a year of troubles brought on by the recession and the swine flu. That steadying is allowing the company to finally begin to raise deeply discounted fares for some destinations, executives said.

“I think it is clear that we’ve kind of stabilized here,” said Chief Operating Office Howard Frank. “And that we have been able to tweak pricing up at a price point that people (still) find very attractive.”

Frank said a full recovery from the worst economic downturn since World War II is likely years away, however.

“We’re not going to see dramatic increases,” he said. “I just think it is going to be a fairly stable environment, maybe slightly improving, but nothing more than that.”

For the three months that ended Aug. 31, the Miami-based company earned $1.07 billion, or $1.33 share. That’s down 19.5 percent from $1.33 billion, or $1.65 per share, in last year’s third quarter.

Revenue fell 14 percent to $4.14 billion from $4.81 billion in the same period last year.

An important industry gauge measuring profit after subtracting expenses fell from last year but was better than expected as more travelers booked vacations just weeks before departure to take advantage of discounts.

Wall Street forecast earnings of $1.18 per share on revenue of $4.05 billion.

Carnival said its fuel costs fell almost 40 percent for the quarter compared with the same period in 2008. And bookings for the rest of the year and through the first half of 2010 are up nearly 20 percent.

The company also said travelers were beginning to make reservations longer in advance than the last-minute purchases that have been standard for months.

“While the environment for travel remains challenging, we are encouraged by the strength we have had in booking volumes throughout the year,” Chairman and Chief Executive Officer Micky Arison said in a statement.

The company’s performance was also helped by travelers beginning to spend more while aboard the company’s 93 ships.

That revenue — $826 million — is 5 percent lower than last year but about 22 percent higher than in the second quarter.

Chief Financial Office David Bernstein said spending at on-board art auctions and casinos is still weak, but other areas such as on-board bars and off-boat excursions are faring better.

For the full year, Carnival now expects to earn between $2.16 per share and $2.20 per share, up from $2 per share to $2.10 per share. In the fourth quarter, it expects to earn between 16 and 20 cents per share. The company expects its costs to fall 12 percent for the year, thanks to cost cutting and lower fuel consumption.

Citi Investment Research analyst Greg Badishkanian said the company’s outlook was conservative and it might be able to exceed those figures.

But Goldman Sachs analyst Steven Kent told investors in a research note that he thought the company’s outlook was “too positive,” given that fuel prices are climbing and swine flu might cut into winter travel.

Carnival shares climbed $1.52, or 4.8 percent, to close at $33.52 Tuesday.