Cruise stocks sink as Carnival misses Wall Street earnings expectations, warns of Q4 loss
Q4 advance bookings are below the historical range, at lower prices compared to 2019
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Cruise stocks sank Friday as Carnival Corporation missed Wall Street earnings expectations for its fiscal third quarter of 2022.
The operator of cruise lines including Carnival, Cunard, Holland America and Princess warned that it expects a net loss and breakeven to slightly negative adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter ending November 30 due to the seasonality of its business. EBITDA is a measure of profitability.
It anticipates that eight of its nine brands will have their entire fleet serving guests by the end of the fourth quarter of 2022.
Similarweb travel and leisure analyst Jim Corridore told Reuters the forecast was a downward revision.
Carnival also cited higher fuel costs which increased to $668 million in 2022 from $182 million in 2021. This increase was caused by higher fuel consumption due to the resumption of guest cruise operations, and an increase in fuel prices of $421 per metric ton consumed in 2022 compared to 2021. The blended spot price for fuel is currently $675 per metric ton.
Carnival cruise ship ‘Sunrise’ docked at Miami Port, in Miami, Florida, June 18, 2022. (REUTERS/Marco Bello / Reuters Photos)
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Carnival narrowed its second quarter net loss to $770 million, or a loss of 65 cents per share, compared to a $2.84 billion loss, or $2.50 per share, in the same period a year earlier. Excluding items, Carnival had a loss of 58 cents per share, well above analyst consensus for a loss of 15 cents per share, according to IBES data from Refinitiv.
Meanwhile, revenue increased 80% to $4.305 billion in three months ended August 1, compared to $546 million a year ago. Revenue missed the analysts' average estimate of $4.9 billion. Carnival experienced higher costs related to inflation, supply chain disruptions and COVID-19 health and safety protocols during the quarter.
Despite the earnings miss, Carnival's adjusted EBITDA for the third quarter of 2022 was over $300 million, turning positive for the first time since the company's resumption of guest cruise operations.
"We are continuing to close the gap to 2019 as we progress through the year, building occupancy on higher capacity and lower unit costs," Carnival CEO Josh Weinstein said in a statement. He added that the company is "relentlessly focused on driving top line growth and returning to strong profitability."
Carnival
Carnival saw its occupancy during the quarter increase 15 percentage points compared to the prior quarter. As of September 30, approximately 95% of Carnival's capacity is serving guests.
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Looking ahead, cumulative advance bookings for the fourth quarter are below the historical range and at lower prices, primarily due to future cruise credits, as compared to 2019 sailings. Cumulative advance bookings for full year 2023 are slightly above the historical average and at considerably higher prices, as compared to 2019 sailings, normalized for future cruise credits.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| CCL | CARNIVAL CORP. | 25.20 | +0.33 | +1.31% |
| RCL | ROYAL CARIBBEAN GROUP | 240.39 | -1.10 | -0.46% |
| NHCL | NO DATA AVAILABLE | - | - | - |
Carnival shares have fallen roughly 20% on Friday, while Royal Caribbean and Norwegian Cruise Line have fallen over 11% and 14%, respectively.