Caribbean questions dominated the earnings call.
Pricing lower for southern Caribbean, up for eastern Caribbean
Management said negative news surrounding hurricane recovery is mainly impacting San Juan-based, southern Caribbean itineraries, where pricing is behind the prior year. (Carnival Cruise Line has one ship sailing from San Juan.)
During the company's March guidance, Carnival had noted pricing in the eastern Caribbean was also down but now it's up, CFO David Bernstein said. Pricing for western Caribbean cruises remains up, despite the industry capacity increase there.
'There is a hurricane malaise, but the Caribbean is strong,' president and CEO Arnold Donald said. 'It's performing well against a strong year last year.'
So, overall, the Caribbean is improving, and there's no change in yield outlook for other geographical regions. It's only that fuel prices are higher and currency will have a negative impact—together, to the tune of 19 cents per share.
Why not more upside?
But analysts questioned why there wouldn't be more upside, if things are going well overall?
Bernstein indicated that since hurricane season is coming, the company builds in an expectation of impact. Asked what that is for the third quarter, Donald told analysts Carnival doesn't give a hurricane-specific figure.
'Lots of things can happen, he said, citing geopolitical issues and other factors. 'It's just a matter of being practical [when giving guidance].'
Not conservative, just practical
Carnival Corp. is 'growing in the Caribbean and generating more earnings there and elsewhere,' Donald continued. 'Overall, we're growing earnings and there is no weakness in the business ... We may be victims of our own conservatism [on guidance], but we're not being conservative, just trying to be practical.'
He ended the call by stressing Carnival's business is strong.
After dipping to $56.95, CCL's decline moderated somewhat by noon Monday, when shares were trading around $58.06, off 8.6%. CCL had closed at $63.53 Friday.
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