September 27, 2018 / 1:30 PM / 20 days ago

Carnival sees fuel prices, dollar to weigh on profit, shares fall

(Reuters) - Carnival Corp (CCL.N) on Thursday forecast fourth-quarter profit below Wall Street estimates due to a strong dollar and rising fuel prices, sending its shares down as much as 8.6 percent.

FILE PHOTO - Arnold Donald, CEO of Carnival Corp. takes the stage to deliver his keynote address at CES in Las Vegas, U.S., January 5, 2017. REUTERS/Rick Wilking

The bleak outlook overshadowed the world’s largest cruise operator’s better-than-expected third-quarter results and weighed on shares of rivals Royal Caribbean Cruises (RCL.N) and Norwegian (NCLH.N).

Carnival, which owns the Queen Mary II and Queen Elizabeth cruisers, said it would take a hit of 11 cents per share in the fourth quarter even as it expects booking trends to be strong in the future.

Brent crude LCOc1 has been trading at its highest in nearly four years and U.S. dollar .DXY has risen 2.7 percent this year. The oil prices are expected to remain high owing to controlled global supply.

The company said it expects fourth-quarter earnings of 65 cents to 69 cents per share, well below the analyst average estimate of 73 cents.

However, Carnival benefited from higher ticket prices on-board spending in the third quarter. Revenue from passenger tickets rose 5 percent to $4.35 billion, while on-board spending, which accounts for about a quarter of total revenue, rose 7.6 percent to $1.32 billion.

Tigress Financial Partners analyst Ivan Feinseth, who has a “buy” rating on Carnival, said the weakness in the company’s stock is a buying opportunity, adding that his number one pick in the industry remains Norwegian (NCLH.N) as it has the “most fuel-efficient fleet”.

Net income rose to $1.71 billion, or $2.41 per share, in the third quarter ended Aug. 31. Excluding certain items, the company earned $2.36 per share, beating analysts’ average estimate of $2.32 per share, according to Thomson Reuters I/B/E/S.

Carnival’s net revenue rose to $5.84 billion from $5.52 billion, above estimates of $5.81 billion.

Reporting by Vibhuti Sharma and Karan Nagarkatti in Bengaluru; Editing by Anil D'Silva and Arun Koyyur

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