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Carnival shares sink despite Q3 profit

Monday, October 02, 2023

Today’s headlines

What’s happening: Shares of Carnival Corporation fell on Friday, after the company released results for its third quarter.

What happened: The world’s biggest cruise line operator posted its first quarterly profit since the pandemic and narrowed its loss projections for the year amid higher ticket pricing.

However, concerns around soaring oil prices exerted pressure on the company’s stock.

How were the results: The Miami, Florida-based company reported strong sales growth for its third quarter.

  • Sales rose 59% year-over-year to an all-time high of $6.85 billion, beating the consensus estimates of $6.69 billion.
  • Adjusted earnings came in at 86 cents per share, versus a year-ago loss of 58 cents per share. The figure also topped Wall Street expectations of 75 cents per share.

Why it matters: Cruise operators had slashed ticket prices to boost demand after the easing of the pandemic. Pricing came down to 30%-40% lower than luxury hotels.

With lower ticket prices, Carnival has taken more than 2.5 million travellers on their maiden cruise voyage this year. The number of first timers in the latest quarter grew by 170% year-over-year.

Passenger Cruise Days rose 45% year-over-year to 25.8 million. Occupancy was 109% in the third quarter, while available lower berth days were 23.7 million.

The company’s selling and administrative expenses rose by 14% to $713 million in the quarter.

“The outperformance was driven by strength in demand, with both our North America and Australia segment and Europe segment equally outperforming expectations,” CEO Josh Weinstein said during the earnings call.

Management projected adjusted EBITDA between $4.10 billion and $4.20 billion for fiscal 2023, versus the previous forecast of $4.10 billion to $4.25 billion. The company also narrowed its loss projection for the year to between 12 cents and 4 cents per share, from its earlier forecast of 20 cents to 8 cents per share.

The company guided to a fourth-quarter loss of 18 cents to 10 cents per share, versus market expectations for a loss of 10 cents per share.

How shares responded: Carnival’s shares fell 5% to close at $ 13.72 on Friday, following the release of quarterly results. The company’s stock has lost around 13% over the last month.

What to watch: Investors will watch rising oil prices, with Brent crude trading close to the $100 level. Growing input costs could expect further exert pressure on Carnival’s margins.

The markets today

European stocks will be in focus today ahead of a couple of major economic reports

Context: European markets closed higher on Friday but recorded the worst quarter for the year.

Details: Investors responded to the latest inflation data from the Eurozone on Friday. The inflation rate in the region eased to 4.3% year-over-year in September, declining to its lowest level since October 2021. The figure also came in better than market expectations of 4.5%.

The data release was in-line with recent announcements from European countries. The preliminary inflation data from Germany, Europe’s biggest economy, showed inflation falling more-than-expected in September.

The STOXX Europe 600 Index gained 0.38% to close at 450.22 on Friday, with most sectors closing in the positive zone. Tech and household goods were among the top performers in Friday’s session.

The pan-European index had closed Wednesday’s session at a six-month low, down around 2.1% in September, after recording a 2.8% decline in the prior month. The index fell around 2.9% for the quarter, despite notching gains in July.

London’s FTSE 100 rose by 0.08% to close at 7,608.08 on Friday, trimming gains recorded earlier during the session. Revised data showed that UK’s GDP had expanded more than expected during the second quarter of 2023.

Germany’s DAX 40 gained 0.41% to reach 15,386.58, while France’s CAC 40 added 0.26% to settle at 7,135.06 on Friday.

What to watch: Investors await the release of economic reports on manufacturing PMI and unemployment rate from the Eurozone today. The HCOB eurozone manufacturing PMI is expected to decline slightly to 43.4 in September, from 43.5 in August. Analysts expect the unemployment rate to rise to 6.5% in August, from 6.4% in July.

Other Markets: US trading indices closed mostly lower on Friday, with the Dow Jones and S&P 500 down by 0.47% and 0.27%, respectively, and the Nasdaq 100 up by 0.09%.

The news shaping the markets

US President Joe Biden promised that aid would keep flowing to Ukraine, following the passing of temporary government funding measure by the Congress. The news sent the safe-haven US dollar index slightly higher this morning.


Australia’s Melbourne Institute’s Monthly Inflation Gauge came in flat for September versus a 0.2% increase in the previous month, which exerted pressure on the AUD/USD forex pair.


Japan’s au Jibun Bank manufacturing PMI was revised lower to 48.5 in September, versus a preliminary reading of 48.6, sending the JPY/USD pair lower in forex trading this morning.


South Korea recorded a trade surplus of $3.7 billion in September versus a year-ago deficit of $3.83 billion, lending support to the KRW/USD forex pair.


China’s official NBS manufacturing PMI rose to 50.2 in September, from 49.7 in the previous month, which sent the CNY/USD pair slightly higher in forex trading this morning.

What else to watch today

Russia’s manufacturing PMI, UK’s nationwide house price index, Türkiye manufacturing PMI, balance of trade and total vehicle sales, Spain’s manufacturing PMI, consumer confidence indicator and total vehicle sales, France’s manufacturing PMI, Germany’s manufacturing PMI, Brazil IPC-Fipe inflation and manufacturing PMI, Italy’s jobless rate, manufacturing PMI and new passenger car registrations, UK’s manufacturing PMI, South Africa’s manufacturing PMI and total vehicle sales, Canada’s manufacturing PMI, US S&P Global manufacturing PMI, ISM manufacturing PMI and construction spending, Mexico’s manufacturing PMI, Brazil’s balance of trade and Central Bank of Brazil focus market readout, as well as Australia’s CoreLogic home value index.


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