Choppy waters ahead for Carnival as losses mount
Cruise company Carnival found itself in stormy seas amid mounting fears over rising costs and the outlook for its fleet.
shares in the firm behind the famous Cunard line fell 16.3pc, or 127.6p, to 653.2p on the FTse 250, after analysts at Morgan stanley cut the target price on the stock from 1050p to just 575p and said it now expects Carnival to rack up losses of close to £750m this year.
The bank had previously expected profits of around £750m but took a red pen to its forecasts after Carnival last week reported a half-year loss of £3.1bn.
Warning of further Covid restrictions this winter ‘as well as weaker pricing’, Morgan stanley trimmed its profits forecasts for next year by 10pc to just over £ 4bn. it expects Carnival’s debt to remain above £25bn for some time, nearly triple its pre-Covid level.
shares in Carnival, whose Cunard line includes the Queen Mary 2 and Queen elizabeth ships, remain down more than 80pc since before the pandemic.
Matt Britzman, an equity researcher at Hargreaves Lansdown, said: ‘Cruise ships come with very high fixed costs. Costs that must be paid whether they leave the port or not.
‘That means the group took a hammering during lockdowns.
‘And just when we thought profit was on the horizon, ongoing uncertainty and rising fuel costs mean Carnival now expects to report a full-year loss once more.
‘Carnival’s future depends on how quickly the travel industry rebounds, and the group’s competitive position when it does.
‘Given the uncertainty ahead and the difficult financial position, investors should proceed with caution.’ A string of blue- chip firms also fell victim to City scribblers with Bank of America turning bearish on the uK’s biggest commercial property companies.
British Land, which owns swathes of the City of London and the Meadowhall shopping centre, near sheffield, fell 8.7pc, or 43.9p, to 463.3p after its target price was cut to 440p from 560p.
rival Land Securities, whose empire includes Piccadilly Lights in London as well as shopping centres in Oxford and Leeds, was down 6.5pc, or 48.2p, to 688.4p after its price target was trimmed to 720p from 870p.
education publisher Pearson fell 5.3pc, or 41.6p, to 747p after a downgrade from uBs.
And drinks giant Diageo fell 2.9pc, or 105.5p, to 3574.5p after a downgrade from Deutsche Bank.
With fears of global recession mounting, it made for a rocky day on the financial markets and the FTSE 100 fell 0.15pc, or 11.09 points to 7312.32, while the FTSE 250 was down 1.61pc or 312.48 points to 19.038.79. Oil nudged over $120 a barrel before easing, lifting BP up 0.2pc, or 0.65p, to 397.7p and Shell gained 0.4pc, or 8p, to 2185p.
Two lockdown winners – Moonpig and B&M – reported falling sales as shopping habits change and the cost-of-living crisis bites.
Greetings card company Moonpig reported a 17.3pc slide in revenues to £304.3m for the year to April 30, with profits down 30.9pc to £51.5m. shares fell 3.6pc, or 8.8p, to 236.2p.
Budget retailer B&M revealed another slump in sales against a year earlier, when trade was boosted amid Covid restrictions.
sales fell 9.1pc across its 705 uK stores in the quarter to June 25. B&M, which also owns 311 Heron Foods shops and has 109 stores in France, said total group sales fell 2.2pc to £1.2bn. shares rose 1.8pc, or 6.7p, to 386.4p.
Car dealership Lookers climbed 3.2pc, or 2.4p, to 76.4p after it nudged up its profits forecasts for the first half to £45m, though still below the £50.3m it made in the same period last year.