Carnival 2Q earnings fall on fuel contract losses

Associated Press

NEW YORK (AP) — Carnival Corp. on Friday reported significantly lower second-quarter net income due to losses on fuel price contracts, but the cruise operator expects higher earnings for the year.

Still, the full-year forecast is well below its original expectations and analysts' current predictions. Carnival shares lost 3 percent in morning trading.

The Miami company said it earned $14 million, or 2 cents per share, for the three months ended May 31 compared with $206 million, or 26 cents per share, a year ago.

Excluding those fuel contracts, the profit decline would have been much smaller. It would have earned $159 million, or 20 cents per share, in the most recent quarter. That beat the company's own expectations.

Revenue slipped to $3.54 billion from $3.62 billion the year before.

Analysts polled by FactSet expected the company to earn 8 cents per share on sales of $3.49 billion. Analysts tend to strip out one-time gains or losses from their estimates.

Fuel prices rose 12 percent in the quarter.

Excluding the impact of its Costa brand, which had a ship that sank off the Italian coast in January killing 32 people, Carnival said it benefited from higher cruise prices and onboard revenue. Strength in North America offset lower yields in Europe, Australia and Asia.

It's still offering sizeable discounts to get people on board Costa ships.

But it thinks growing revenue and demand elsewhere will lead to higher full year earnings than it expected three months ago.

For all of 2012, it expects to earn between $1.80 and $1.90 per share, compared with its March expectation of $1.40 to $1.70 per share. It's still a far cry from the $2.55 to $2.85 per share Carnival anticipated before the Concordia sank. Analysts polled by FactSet currently predict earnings of $1.72 per share.

For the third quarter, it expects to earn between $1.42 and $1.46 per share. That's in-line with analysts' average expectation of $1.44 per share.

Its shares fell 95 cents, or 2.8 percent, to $33.63 in morning trading. They are still 13 percent below their high of $38.83 last July.