Carnival cruise firm's shares fall after discounts threaten profits

A ship had to deliver food to the Carnival Triumph after it was left stranded off the Gulf of Mexico A ship had to deliver food to the Carnival Triumph after it was left stranded off the Gulf of Mexico

Related Stories

Shares in cruise company Carnival have fallen more than 7% after it issued a profit warning - its second in just three months.

Carnival, which operates ships under brands such as P&O and Costa Cruises, said full year revenues, which were expected to be flat, would now fall 2-3%.

It blamed the drop on a higher-than-expected rise in voyage cancellations.

In turn, this weaker demand resulted in downward pressure on ticket prices.

"The company now expects full year 2013 earnings per share to be in the range of $1.45 to $1.65 compared to its previous earnings guidance of $1.80 to $2.10," Carnival said in a statement.

Panmure Gordon analyst Karl Burns advised investors to sell the shares following the warning, saying cutting ticket prices was unwise.

"Price reductions have not been offset by a high enough increase in volumes," he said.

"This bodes ill for the future as we think Carnival will struggle to regain pricing power."

Carnival

Last Updated at 22 Aug 2014, 11:36 ET *Chart shows local time Carnival intraday chart
price change %
2291.00 p -
-1.00
-
-0.04

The firm has suffered a series of high profile problems with its ships.

The most devastating incident was in 2012, when its Costa Concordia ship ran aground off the coast of Italy. Thirty-two people died in the shipwreck, which an official report blamed on the captain of the Costa Concordia, as well as assigning some responsibility to Costa Cruises.

More recently, Carnival chief executive Gerry Cahill was forced to apologise to customers after its Carnival Triumph boat was left adrift in the Gulf of Mexico for five days in February. The 4,200 passengers aboard the cruise suffered overflowing toilets and a shortage of food.

In March, a Caribbean cruise on its Carnival Dream boat had to be cut short due to a "technical" malfunction of the ship's back up diesel generator.

Soon after another Caribbean cruise on its Carnival Legend ship was also shortened due to a technical fault.

More on This Story

Related Stories

The BBC is not responsible for the content of external Internet sites

More Business stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.