Carnival stock sinks after cruise line warns of longer voyage to generate profit


Carnival on Friday forecast a fourth-quarter loss as rising fuel prices and rising costs for daily necessities delay its return to profitability, sending shares of the cruise line down 19% as of midday.

High inflation for decades has further hit cruise lines who have been at a loss since the outbreak of the pandemic in 2020 for a variety of reasons including closures, cruise bans, safety and labor shortages caused by the pandemic.

Adding to its challenges, Carnival has sharply reduced and intensified advertisements to attract passengers after a long period of the pandemic.

It also has a higher exposure to the mass market category which has been hit harder by inflation. The company said it expects to break even with slightly negative adjusted earnings before interest, taxes, depreciation and amortization for the fourth quarter ending Nov. 30.

Travel and leisure web analyst Jim Corridore said the fourth quarter downward revision was not related to demand or revenue, but to rising costs for restarting operations, problems with supply chain and likely rising labor, food and fuel costs.

High inflation for decades has further hit cruise operators who have been at a loss since the pandemic hit in 2020.
Christopher Sadowski

The cruise line’s cumulative advance bookings for the current quarter are below the historical range and at lower prices. Earlier this year, Carnival forecast a loss for the year, with Moscow’s invasion of Ukraine adding new challenges.

The cruise line’s revenue in the third quarter ended Aug. 31 hit $4.31 billion from $546 million a year earlier, but missed analysts’ average estimate of $4.90 billion, according to IBES data. by Refinitiv.

Net loss, however, narrowed to $770 million, or 65 cents per share, from $2.84 billion, or $2.50 per share, a year earlier.

New York Post

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