Carnival Corp raised its annual profit forecast on Monday, leaning on strong demand and higher ticket prices for its cruise vacations to offset mounting costs.
The cruise operator has been investing heavily to offer more unique and private experiences by expanding its portfolio to meet strong demand for exclusive destinations. These included a $600 million investment in Celebration Key, an ambitious private resort destination on Grand Bahama, to help maintain its competitive edge.
Bundled packages, perks such as drinks, Wi-Fi, and excursions have encouraged guests to spend more onboard, further boosting the company's revenue.
However, cruise operators are grappling with higher fuel costs and expenses related to dry docking of ships for maintenance.
"We are expecting to do more work during our 2026 dry docks. The additional expenses will impact our overall year over year assumptions by up to one percentage point," CFO David Bernstein said on a post earnings call.
There is also a risk of consumers pulling back on discretionary spending, as inflation and tariff-driven uncertainty weigh on travel budgets.
Shares of the company were down about five per cent on Monday as Carnival also expects cruise costs for the year, excluding fuel, to rise 3.3 per cent. The stock has risen about 23 per cent so far this year.
There are heavy investments in 2026, with the destination portfolio and drydocks, and this will weigh on earnings growth, Morningstar analyst Jaime Katz said on what could be pulling shares lower.
Still, for fiscal 2025, the company forecast adjusted earnings per share of about $2.14, up from its prior expectations of about $1.97.
The cruise operator reported adjusted profit per share of $1.43 for the quarter ended August 31, beating analysts' estimates of $1.32, according to data compiled by LSEG.
The company also logged quarterly sales of $8.15 billion, compared with analysts' estimates of $8.10 billion.
(Reporting by Neil J Kanatt in Bengaluru; Editing by Krishna Chandra Eluri and Leroy Leo)
