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Carnival Slashes 2013 Outlook As Embarassments Pile Up


Carnival Corp. (CCL) turned to profit in the first quarter after a loss in the same period a year ago Friday, even as the cruise operator deals with a series of embarrassing mechanical issues impacting four of its ships.

Earlier this year, its Triumph ship was towed to port after a being adrift at sea for five days, and twice this week the cruise line was forced to cut short excursions due to technical issues.

Adjusted earnings per share and first quarter revenues topped analysts' expectation.

However, the company also provided earnings guidance for the second quarter that is well below Street view, and slashed its earnings forecast range for the full-year 2013. It is expected that Carnival faces expensive repairs to renovate its fleet and will need to aggressively price future sailings to lure back customers.

The company's Chairman and CEO Micky Arison noted that first quarter earnings were better than December guidance due to the timing of certain expenses partially offset by $0.02 per share resulting from voyage disruptions and related repair costs.

The Miami, Florida-based company reported net earnings of $37 million or $0.05 per share for the first quarter, compared to a net loss of $139 million or $0.18 in the prior-year quarter.

The year-ago quarter included $0.22 per share of Ibero goodwill and trademark impairment charges.

Excluding unrealized gains/losses on fuel derivatives and charges, adjusted net income for the quarter was $65 million or $0.08 per share, compared to $13 million or $0.02 per share in the year-ago quarter.

On average, 14 analysts polled by Thomson Reuters expected Carnival to report earnings of $0.02 per share for the first quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter edged up to $3.59 billion from $3.58 billion in the same quarter last year, and topped eleven Wall Street analysts' consensus estimate of $3.56 billion by a whisker.

For the first quarter, revenues from cruise passenger ticket sales totaled $2.74 billion, lower than $2.76 billion last year, while cruise on-board and other revenues for the period grew to $844 million from $809 million in the year-ago quarter.

Operating costs and expenses for the quarter declined to $2.60 billion from $2.69 billion in the year-ago quarter.

Fuel prices for the quarter decreased 4 percent to $677 per metric ton from last year's $707 per metric ton.

Looking ahead to the second quarter, Carnival expects adjusted earnings in a range of $0.04 to $0.08 per share. Analysts expect the company to report earnings of $0.29 per share for the quarter.

For fiscal 2013, the company slashed its adjusted earnings guidance to a range of $1.80 to $2.10 per share from the prior forecast range of $2.20 to $2.40 per share. Street is currently looking for full-year 2013 earnings of $2.35 per share.

"We expect to drive return on invested capital higher through a measured pace of capacity growth and a continued focus on fuel consumption savings. We continue to expect over $3 billion of cash from operations this year and remain committed to returning free cash flow to shareholders in 2013 and beyond," Arison added.

In Friday's regular trading session, CCL is currently trading at $34.30, down $1.43 or 4.00% on a volume of 3.98 million shares. In the past 52-week period, the stock traded in a range of $28.52 to $38.14. CUK is currently trading at $35.30, down $1.82 or 4.90% on a volume of 0.17 million shares.

CCL.L is currently trading on the London Stock Exchange at 2,295.00 pence, down 135.00 pence or 5.56% on a volume of 1.79 million shares.

by RTTNews Staff Writer

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