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A large Carnival cruise ship docked in port in turquoise blue water.
Dream
Shares of
Carnival
were up on Friday after the cruise line reported second-quarter revenue that rose sharply from the first quarter of 2022.
Carnival
(teleprinter:
CCA
) reported a GAAP loss of $1.61 per share, higher than analysts’ estimates for a loss of $1.08 per share. Revenue was $2.4 billion, up nearly 50% from the first quarter but lower than forecast at $2.76 billion, according to FactSet.
The occupancy rate in the second quarter was 69%, compared to 54% in the previous quarter. Customer deposits, in turn, rose $1.4 billion to $5.1 billion as of May 31, from $3.7 billion at the end of February.
As of Friday, 91% of the company’s capacity was in guest cruise operation, while booking volumes for future sailings in the second quarter were nearly double booking volumes in the first quarter. Five of Carnival’s nine brands have now returned their entire fleet to guest cruise operations.
“It is encouraging to see that demand continues to be strong, with our customers overcoming much more restrictive protocols than society at large and travel in general, resulting in a near doubling of booking volumes since last quarter, bookings short-term even surpassing 2019,” Arnold Donald said. , current CEO. “We have been encouraged by close demand and remain focused on optimizing occupancy while preserving prices over the long term.”
Carnival expects adjusted non-fuel cruise costs to improve from the first half of 2022 to the second half of 2022.
The company added that the Covid-19 pandemic, inflation and rising fuel prices had a “material impact” on the company’s business and that it expected to report a net loss for the third quarter of 2022 and exercise. Carnival estimates that Adjusted Ebitda, or earnings before interest, taxes, depreciation and amortization, will improve with ongoing cruise operations until it returns to historic levels in 2023. The company expects to a positive adjusted EBITDA for the third quarter of 2022.
Carnival also reaffirmed its commitment to its previously announced succession plan. Effective August 1, Donald will be named vice-chairman of the board, while Josh Weinstein, current chief operating officer, will assume the role of chief executive.
Carnival shares rose 10% to $10.62 on Friday. But stocks have lost 47% in the past year, battered by fears that a potential recession could dampen consumer demand for cruises.
While the travel industry as a whole has been impacted during the pandemic, cruise lines have absorbed a significant portion of the pain. Although travel has resumed, cruises have been slower to follow, given rising fuel and cost inflation on top of Covid-19 restrictions that have prevented unvaccinated travelers from cruising.
Carnival’s second-quarter results may encourage investors to believe the crisis may be over soon. Indeed, some analysts have been optimistic that a strong summer session could be a boon for cruise lines.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
