Cruise operator Carnival sets sail for strong 2020 on Caribbean demand

(Reuters) - Cruise operator Carnival Corp CCL.N on Friday forecast 2020 profit largely above analysts' expectations and reported better-than-expected quarterly earnings, driven by strong demand for its Caribbean cruises, sending its shares up about 9%.

The company expects adjusted profit between $4.30 and $4.60 per share for its financial year ending 2020, the mid-point of which is above the average analyst estimate of $4.39, according to IBES data from Refinitiv.

Carnival is benefiting from growing demand for luxury travel experience, particularly for Caribbean cruises that constitute more than 30% of the company’s itinerary.

“The Caribbean remains strong in occupancy and yield growth overall for our brands,” said Chief Executive Officer Arnold Donald on a post-earnings conference call.

Changes in fuel mix, fuel prices and currency exchange rates are expected to increase earnings by $0.17 to $0.24 per share in fiscal 2020 compared with 2019, the company said.

The upbeat forecast from the global cruise industry's bellwether also lifted shares of rivals. Royal Caribbean Cruises Ltd RCL.N and Norwegian Cruise Line Holding Ltd NCLH.N were both up about 4%.

Carnival’s net revenue rose 7.3% to $4.78 billion, beating the average analyst estimate of $4.57 billion, helped by efforts to draw passengers and increase on-board spending through attractions such as roller coaster rides, IMAX theaters, water parks and live music.

Revenue from on-board spending, which accounts for nearly a third of total revenue, jumped about 30% to $1.52 billion.

“The overall backdrop is that the consumer is very flush,” said Tigress Financial Partners analyst Ivan Feinseth.

“Despite the negativity from the stock market thinking that eventually cruise demand will fall, it hasn’t,” he said.

Excluding items, the company earned 62 cents per share in the fourth quarter ended Nov. 30, while analysts had expected 50 cents.

Carnival’s shares rose as much as 9.8% to their six-month high of $51.20.

Reporting by Soundarya J and Praveen Paramasivam in Bengaluru; Editing by Krishna Chandra Eluri