* Forecasts full-year profit below analysts' estimates
* Warns it may post loss for current quarter
* Shares fall as much as 6 pct
(Adds CEO and analyst comments; updates shares)
By Devika Krishna Kumar
March 25 Carnival Corp, the world's
largest cruise operator, forecast a full-year profit below
analysts' estimates as it cuts prices and spends more on
advertising to attract customers after onboard mishaps hurt
demand over the past couple of years.
Shares of Carnival, which also warned it might post a loss
for the current quarter, fell as much as 6 percent in late
"Pricing has been weak for a while now and a lot of it is
with regard to their specific brand issues and operational
issues," Edward Jones analyst Robin Diedrich said.
Carnival's image took a hit after the operator of the
Carnival, Holland America and Costa cruise lines suffered a
series of mishaps on its ships, including the sinking of its
Costa Concordia off Italy in 2012.
The company was sued earlier this month by passengers who
had been stranded on the Carnival Triumph for five days in the
Gulf of Mexico after a fire on the ship in February last year.
Carnival is not only cutting prices, but also increasing its
advertising spending to woo customers.
"We have increased our investment in advertising and expect
to spend over $600 million in 2014. That is a 20 percent
increase over 2012," Chief Executive Arnold Donald said on a
conference call with analysts.
Carnival's forecast contrasted with that of the no. 2 cruise
operator, Royal Caribbean Cruises Ltd, which raised its
full-year earnings forecast in January, saying its ticket sales
in Europe were improving.
Donald said Carnival was experiencing some recovery in
demand from Europe, which accounted for about 30 percent of its
passenger capacity in 2013.
"We've seen a continued improvement in perception with an
almost doubling of trust and confidence in the core Italian
market," he said.
Diedrich, however, said it would take some time for Carnival
to return to the "normalized" earnings pattern the company had
seen in the past. Edward Jones has a "hold" rating on the
Carnival forecast an adjusted profit of $1.50-$1.70 per
share for the year ending November.
Analysts on average were expecting $1.72 per share,
according to Thomson Reuters I/B/E/S.
Carnival said it might post a loss of 2 cents per share to a
profit of 2 cents per share for the current quarter ending May,
mainly due to higher selling and administrative costs. Analysts
on average were expecting a profit of 7 cents per share.
The company said it continued to expect net revenue yields,
on a constant-dollar basis, to fall slightly in 2014.
Net revenue yields, which blend ticket sales and money spent
onboard, fell 2.1 percent in the first quarter ended Feb. 28 on
a constant-currency basis.
Carnival reported a net loss of $15 million, or 2 cents per
share, for the quarter compared with a profit of $37 million, or
5 cents per share, a year earlier.
Excluding items, the company barely broke even on a
Revenue fell marginally to $3.58 billion.
Analysts on average had expected a loss of 8 cents per share
on revenue of $3.56 billion.
Carnival's shares were down 5.4 percent at $37.86 in noon
trading on the New York Stock Exchange.
(Additional reporting by Shailaja Sharma in Bangalore; Editing
by Kirti Pandey)