Carnival shares up on 2012 pricing strength

Tue Sep 20, 2011 2:54pm EDT

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(Reuters) - Carnival Corp & Plc (CCL.N) (CCL.L) said advance bookings for next year so far are fetching higher prices, sending shares in the world's largest cruise operator up 8 percent.

The comments from the operator of Carnival Cruise Lines, Holland America and Princess Cruises on Tuesday came amid persistent jitters about the global economy and buoyed shares in rival Royal Caribbean Cruises Ltd (RCL.N), which rose 6.5 percent.

Executives still sounded several notes of caution, saying the cruise industry is not immune to political rancor in Washington, the volatile U.S. stock market, European debt woes or rising fuel costs.

"Even during this difficult August and September period, bookings have held up quite well, which is a testament to the resiliency of our cruise business," Chief Operating Officer Howard Frank told analysts on a conference call.

He noted that over the last three months, more trips were booked for the first half of next year, and at higher prices.

Nevertheless, bookings and pricing did have a "modest fall-off" in August as a result of the "debt ceiling political circus in Washington, and the related meltdown in the U.S. equity markets during the month," Frank said.

He added that Europe's sovereign debt issues and the related concerns about the strength of the region's banks contributed to the slowdown of bookings in its unit that includes European, Australian, and Asian brands.

"With the extremely negative sentiment around cruise stocks, we believe investors had likely been pricing in flat to negative net yield growth for 2012," Citi Investment Research analyst Gregory Badishkanian said in a client note.

Net yield is a measure of how much money cruise operators make per cabin.

Miami-based Carnival on Tuesday reported third-quarter net income of $1.33 billion, or $1.69 per share, on revenue of $5.06 billion, compared with a profit of $1.3 billion, or $1.62 a share, on revenue of $4.53 billion in the year-ago quarter.

Excluding one-time items, Carnival earned $1.71 per share, besting Wall Street estimates of $1.63, according to Thomson Reuters I/B/E/S.

Chief Executive Officer Micky Arison said in a statement that higher revenue yields, a measure of profitability based on revenue per passenger, rose enough to make up for a 45 percent jump in fuel costs.

The revenue yields were up 2.6 percent in constant dollar terms over the peak summer season, helped by strong results in North America, The yields fell in its European, Australian and Asian businesses, which Arison said were hurt by the unrest in the Middle East and North Africa.

The world's largest cruise operator forecast a 1 percent to 2 percent increase in net revenue yields for the fourth quarter on a constant dollar basis compared with a year earlier, and earnings between 26 and 30 cents per share.

The profit forecast took a hit from higher prices for fuel. Carnival warned that fuel costs would rise $171 million during the fourth quarter compared with a year ago, denting earnings per share by 22 cents.

Carnival shares were up 8 percent at $34.82 in afternoon trading on the New York Stock Exchange on Tuesday.

(Reporting by Phil Wahba in New York and Lisa Baertlein in Los Angeles, editing by Gerald E. McCormick, Matthew Lewis and Gunna Dickson)

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