The statement from Carnival has a very strong bullish tone, and there’s little doubt its earnings will get a further lift in the current year, after net income advanced about 12% in FY2014, said Ken Odeluga, a senior market analyst at Cityindex in London.
“But a lift is all the market expects, with profits looking set to rise by a modest 2.5%, or perhaps even less now, given the measured guidance in today’s report,” he said in a reaction to Carnival group’s second quarter interim results released earlier today.
“There’s a clue in one of Carnival’s most assertive statements in the report, that it’s "stepping up…marketing investment for the remainder of the year to further solidify our base of business for 2016".
"2015 won’t entirely be a write-off in earnings terms, but the tough comparable earnings of the year before have presented a high hurdle amid low margin for error year-to-year, and it makes sense to expect growth in 2016 to look better than that expected for 2015,” he concluded.
“Ironically, the crude oil related-benefits which bolstered the cruise line’s earnings in the second half of 2014, are part of the reason why earnings for the current year are going to be softer,” he said
“CCL(Carnival Corp & plc) got caught on the wrong side of a fuel hedging deal which will cost 6c a share in Q3; at the same time, for now, full-year 2015 net cruise costs excluding fuel are forecast to rise circa 3% says Carnival Corp. Unfortunate, considering CCL said fuel prices it paid “fell 37%” for Q2 2015 vs. Q2 2014,” Odeluga said
Stepped-up “marketing investment” for the remainder of the year, and quarterly net cruise costs, excluding fuel having already risen 6.1% (under an artificially flat currency effects) are further incrementally negative news, which a forecast net revenue yield rise of 3%-4% (again, in flat FX terms) can only vaguely be expected to offset.
