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Stormy outlook for cruise ships

High fuel costs and the threat of a busy hurricane season slice into major Florida lines' summer bookings.

By Times staff and wires
Published May 17, 2006

Shares in Florida's dominant cruise ship companies tumbled sharply Tuesday on concerns soaring fuel costs and hurricane fears have cut into summer bookings.

The stock of Carnival Corp. tumbled to a new 52-week low Tuesday after the world's largest cruise operator reduced its earnings outlook, citing weak bookings. Fellow Miami-based cruise giant Royal Caribbean Cruises Ltd. felt the fallout, with its shares dropping almost 7 percent to end the session at $37.54.

All six cruise ships sailing from Tampa's port this year are Carnival and Royal Caribbean brand vessels.

Carnival Cruise Lines sails the only year-round vessels, the Carnival Miracle and Inspiration. Holland America, another Carnival Corp. brand, will bring its Ryndam and Veendam to Tampa for winter-spring cruises this year.

Royal Caribbean has one ship each from its two brands, Royal Caribbean International's Legend of the Seas and Celebrity Cruises' Zenith. Both sail during the winter-spring season.

Miami-based Carnival said it expects 2006 earnings per share to be between $2.65 and $2.75, down from a March 23 prediction of $2.90 to $3. The company expects earnings for the second quarter to be in the range of 43 cents to 45 cents per share, down from the earlier forecast of 48 cents to 50 cents.

The average estimate of analysts surveyed by Thomson Financial was $2.93 per share for the year and 46 cents for the second quarter.

The company's stock plummeted to $41.35 in morning trading, below a previous low of $45.78 from October. The shares closed 8.5 percent lower, or down $3.94, at $42.60 on the New York Stock Exchange.

"Although we are disappointed having to lower our guidance for the year, we believe the fundamentals of our business remain sound and our long-term strategies position us well to grow our business in 2007 and beyond," chairman and CEO Micky Arison said in a statement.

Carnival said the weakness in reservations was principally seen for trips in the Caribbean for the last six months of this fiscal year. Lower revenue yields should reduce full-year earnings by about 10 cents a share.

Fuel costs have increased since March and are expected to trim full-year earnings per share by about 7 cents, the company said.

Accounting changes on how dry-dock costs are expensed will cut earnings per share for the year by about 8 cents.

Times staff writer Steve Huettel contributed to this report.

[Last modified May 17, 2006, 06:45:47]