Carnival Corporation & plc, the Anglo-American cruise shipping group, has cut its earnings forecast for the financial year to 30 November 2019 on a host of factors.
The company expects full year 2019 adjusted earnings per share to be in the range of $4.25 to $4.35, compared to March guidance of $4.35 to $4.55 and 2018 adjusted earnings per share of $4.26, it said in a statement.
President and Chief Executive Officer Arnold Donald said in the statement:, "Recent booking trends have been impacted by ongoing geopolitical and macroeconomic headwinds affecting our Continental European brands. We continue to expect higher yields in our North America and Australia brands offset by lower yields in our Europe and Asia brands for the remainder of the year."
Voyage disruptions related to Carnival Vista are expected to have a financial impact of approximately $0.08 to $0.10 per share.
The U.S government's policy change on travel to Cuba has a financial impact of approximately $0.04 to $0.06 per share. While the company was able to quickly adjust its itineraries to provide guests with attractive alternative vacation experiences, the suddenness of the regulatory change to this high yielding destination has led to a near-term impact on revenue yields.
In addition, the company is adjusting its full year net revenue yield guidance by 50 basis points mainly due to lower ticket prices forecasted in the second half of the year, resulting primarily from ongoing headwinds faced by the company's Continental European brands.
At this time, cumulative advanced bookings for the remainder of the year are slightly ahead of the prior year at prices that are in line with the prior year on a comparable basis. Pricing on bookings taken since March have been running behind the prior year on lower booking volumes in part because the company had less inventory remaining for sale. Cumulative advanced bookings for the full year 2020 are well ahead at prices that are in line compared to 2019.
The decline in revenue yields is mostly offset by $0.02 per share impact from lower fuel consumption and a net favorable $0.08 per share impact from changes in fuel prices and currency exchange rates since the time of March guidance.
Based on current booking trends, the regulatory change and voyage disruptions, the company now expects full year 2019 constant currency net cruise revenues to be up approximately 4.5%, with capacity growth of approximately 4.5%.
Net revenue yields in constant currency are expected to be in line with the prior year compared to March guidance of up approximately 1.0%. Net revenue yields in constant currency are expected to be flat to down slightly for the third quarter and lower for the fourth quarter when compared to the prior year. The company now expects full year net cruise costs excluding fuel per ALBD in constant currency to be up approximately 0.7% compared to the prior year. The 0.2% increase compared to March guidance is due to the aforementioned voyage disruptions.
Donald commented: "Over the past five years we have demonstrated our ability to overcome multiple headwinds and deliver strong operational improvement. This year our growth has been hampered by a confluence of events, which we are focused on mitigating. Generating over $5 billion of cash flow and with a robust business model, our business is strong and we remain confident over time we will deliver double-digit earnings growth and growth in return on invested capital."
