Carnival Corporation on Tuesday forecast third-quarter profit below estimates, as elevated fuel costs and geopolitical tensions continued to squeeze margins, sending its shares down about five per cent.
Cruise operators, heavily reliant on fuel oil and marine gas oil, have been grappling with a tougher operating environment after the Middle East conflict heightened concerns over prolonged supply disruptions.
Carnival also posted weaker-than-expected second-quarter revenue and said that geopolitical volatility weighed on bookings, particularly for European itineraries in the Mediterranean, which were closest to the conflict.
The company - the only major US cruise operator that typically does not hedge fuel - said it was, "overcoming extreme geopolitical headwinds and nearly 30 per cent higher fuel costs," during the quarter.
Its revenue of $6.66 billion for the quarter ended May 31 came in below analysts' estimates of $6.69 billion, according to data compiled by LSEG.
However, Carnival said its booking position for the second half of the year was higher than last year, helped by strong demand from wealthier travellers.
Carnival's quarterly adjusted profit of 41 cents per share topped estimates of 35 cents.
"Our second-quarter operational outperformance and accelerated cost efforts are offsetting the moderation we've incorporated into our back half outlook, given the impact of the prolonged conflict," CEO Josh Weinstein said on a post-earnings call.
The company expects quarterly adjusted earnings per share to be about $1.35, compared with estimates of $1.42.
It forecast annual adjusted cruise costs, excluding fuel, to be about 2.4 per cent on a constant currency basis, compared with its prior projection of 3.1 per cent.
Peers Royal Caribbean and Norwegian Cruise Line Holdings also flagged pressures from fuel costs during their first-quarter reports.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Maju Samuel)
