(March 27): Carnival Corp cut its full-year profit outlook as surging crude prices are driving up fuel costs.
The Miami-based cruise operator now sees full-year earnings of about US$2.21 per share, adjusted for some items. That’s down from a December forecast of about US$2.48 and below analysts’ estimates of US$2.35.
Oil prices have climbed to their highest levels since 2022, with both West Texas Intermediate and Brent crude up more than 60% this year as the war in the Middle East has led to strikes on energy assets and a near halt of shipments through the Strait of Hormuz.
Carnival also hiked the expected fuel costs for the year by a third to US$2.15 billion, according to a Friday statement. It expects to spend US$610 million on fuel alone in the three months through May 31, above market expectations of US$539 million.
Carnival does not hedge fuel costs, William Blair analyst Sharon Zackfia said in a note before results, expecting it to lead to muted earnings growth for the year versus its prior expectations for about a 10% increase.
See also: US stocks drop, Nasdaq 100 falls into correction as oil climbs
The liner posted its strongest first-quarter profit since 2020 — ahead of estimates and its own guidance — which should help soften the blow on this year’s bottom line. “This performance supported an increase to our full year operational outlook of nearly US$150 million, helping to mitigate the impact of higher fuel prices,” Chief executive officer Josh Weinstein said in the statement.
Shares fell as much as 3.9% after the market opened in New York. The stock had fallen 17% this year as of Thursday’s close.
Carnival is among the first major cruise operators to report results since the recent spike in oil prices. Through Thursday’s close, shares of Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd have fallen 12% and 20%, respectively, since the Iran war began.
Uploaded by Felyx Teoh
