Carnival cruising through choppy waters
CARNIVAL is a British- American owned company with share listings in both London and New York.
As the world’s largest cruise operator – it was formed by the merger of Carnival Corporation and P& O Princess Cruises – the company estimates that it services 10 million guests per year on its fleet of more than 100 ships ( another eight are to be added between 2016 and 2018).
Through brands including Princess Cruises, Cunard, Seabourn and P& O, the company visits a variety of destinations, such as the Bahamas, Caribbean and Canada. Its current market value of £ 7.6billion is reflected by its status as a FTSE100 company, as well as its S& P500 listing in the US. We previously looked at Carnival in June 2014, since when the shares have risen 52 per cent to stand at the current level of £ 35.11.
In June, Carnival announced mixed second quarter results. Net income of $ 193million (£ 124million) was reported for the quarter, up from $ 73million (£ 47million) in the second quarter of 2014.
In addition, the group launched its “fathom” brand. Starting in April 2016, “fathom” will introduce a new cruise category offering passengers authentic and meaningful experiences to targeted destinations. Less favourably, and given something of a rebound in the oil price, changes in fuel prices, net of derivatives and currency, were expected by management to reduce third quarter earnings by 6 US cents per share. Furthermore, currency volatility also continued to impact, with changes in exchange rates reducing second quarter earnings by 10 US cents per share.
Being exposed to global economies and also being at the higher end of discretionary spend, Carnival’s share price has had a choppy crossing. Prior to the financial crisis, the shares peaked at £ 33.45 in January 2006, only to fall to a low of £ 11.05 in November 2008.
More positively, the company has recently embarked on a fresh bout of advertising spending, and with prospects remaining intact as a potential new generation of customers comes into view, market consensus for the shares remains positive, coming in at a buy. “This article is designed for investors who make
their own decisions without advice, if unsure whether an investment is right for you, you should seek advice. Shares can rise and fall in value so
you could get back less than you invest.”