Carnival Corp. said that since June, prices for cruises
booked for the first half of 2019 are lower compared to the prior year, although
volume is significantly higher.
Investors concentrated on the suggestion of weak pricing to
drive down Carnival shares almost 9% shortly after third-quarter results were
released.
Carnival said that cumulative advanced bookings for the
first half of 2019 (including bookings made before June) are ahead of the prior
year at prices that are in line with the prior year.
Carnival Corp. CEO Arnold Donald alluded to fears of overcapacity
in the Caribbean in a conference call with analysts.
"The Caribbean has been very good and is strengthening
further," Donald said. "We're being told there's a lingering
challenge or some yield risk in the Caribbean, and the reality is we have had
multiple periods where we have been ahead on occupancy and lower on pricing and
we turned out just fine," he said.
"A lot of this is managing the booking curve; it's
yield management," Donald said.
"We don't want to create any image that there's a
struggle in the Caribbean, because there isn't," Donald continued, saying
that the ultimate focus is on earnings growth, not necessarily price growth.
Donald's comments came in a discussion of third-quarter
earnings. Net income totaled $1.7 billion on revenue of $5.8 billion. A year
earlier, Carnival's net income was $1.3 billion on revenue of $5.5 billion.
SunTrust Robinson Humphrey analyst Patrick Scholes said the
net revenue yield growth for the third quarter was above expectations. But he
said the forecast for yields for the first half of 2019 is lower than the
growth projected for the fourth quarter of 2018. "This is what the market
is focusing on now," he said.