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Carnival beats Q1 forecasts, but fuel, F/X drag 2019 outlook

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Carnival Corp. & plc's first quarter adjusted earnings per share of 49 cents beat Wall Street's 44-cent forecast and the company's own guidance of a range of 40 cents to 44 cents. Shares fell on the Q2 outlook and narrowed full-year guidance reflecting higher fuel costs and the negative impact of currency.

Stock price sinks 8%

By midday, CCL shares were trading at around $52.03, down more than 8%.

Adjusted net income was $338m, compared to $375m, or 52 cents EPS, for the first quarter of 2018. Included are net charges of $2m for the recent quarter and net gains of $16m for Q1 2018 relating to unrealized gains on fuel derivatives net of other charges.

US GAAP net income was $336m, or 48 cents EPS, up from $391m, or 54 cents EPS the prior year.

Revenues rise to $4.7bn

Revenues were $4.7bn, up from $4.2bn.

'First quarter earnings included revenue growth from higher capacity and improved on-board spending, offset by the timing of cost increases and a drag from fuel price and currency compared to the prior year,' Carnival Corp. & plc president and CEO Arnold Donald said. He noted earnings were better than the mid-point of December guidance by 7 cents per share.

For the full year, Carnival's guidance now reflects $155m, or 22 cents per share, from fuel price and currency moving against the company.

'Operationally, we continue to expect revenues and adjusted earnings per share improvements in line with our December guidance. We expect adjusted earnings per share to be higher than the prior year, despite a $45 million, or 6 cents per share, year over year drag from currency and the price of fuel,' Donald said.

2019 outlook

At this time, cumulative advanced bookings for the remainder of 2019 are ahead of the prior year at prices that are in line with the prior year on a comparable basis. Pricing on bookings taken since January have been running in line on a comparable basis to the prior year while booking volumes are ahead. As a result, even with higher capacity, there is less inventory remaining for sale than at the same time last year.

'Booking trends achieved during wave season rivaled last year's historical highs and were consistent with the demand trends we experienced going into the year, building further confidence in our full year guidance,' Donald said. 'For our North America and Australia brands, our booked position is ahead of the prior year at higher prices while our Europe and Asia brands are well ahead of the prior year at lower prices. Our brands are strong and growing, including continental Europe, where we continue to expect revenue growth driven by double-digit capacity increases.'

Based on current booking trends, Carnival projects full year 2019 constant currency net cruise revenues to be up approximately 5.5%, on capacity growth of 4.6%, and net revenue yields in constant currency to be up approximately 1% compared to the prior year, driven by the NAA brands.

EPS range goes to $4.35 to $4.55, under $4.78 consensus

Full year 2019 adjusted EPS is now expected to be in the range of $4.35 to $4.55, compared to December guidance of $4.50 to $4.80, due to changes in fuel price and currency exchange rates and compared to 2018 adjusted EPS of $4.26. Wall Street had been forecasting $4.78.

Second quarter guidance

Adjusted EPS for Q2 are forecast in the range of 56 cents to 60 cents, versus Q2 2018's 68 cents. This is lower than Wall Street's 72-cent consensus.