NEW YORK (AP) — Passengers remain hesitant to book cruises, despite deep discounts. But that didn’t stop Carnival Corp. from eking out a $41 million second-quarter profit thanks to lower fuel costs and the timing of some administrative expenses.
The Miami-based company also announced Tuesday that Micky Arison, who has been CEO since 1979 and is the son of Carnival co-founder Ted Arison, is being replaced by Arnold W. Donald, who has served on the company’s board for the past 12 years. Arison will continue to serve as chairman of the board.
The profit was nearly triple the $14 million the world’s largest cruise company earned during same period last year, a quarter which it suffered from steep losses on fuel prices bets known as derivatives.
Earnings totaled of 5 cents per share this quarter, up from 2 cents a share last year at this time. Revenue fell 1.7 percent to $3.48 billion.
Excluding one-time items, Carnival’s earnings were 9 cents per share. Analysts polled by FactSet had expected earnings of 6 cents per share on revenue of $3.56 billion.
Shares of Carnival rose $1.67, or 5 percent, to close at $34.89 Tuesday.
Arison led the company through an aggressive expansion that included the acquisition of several brands, including Holland America, Costa Cruises, Cunard and Seabourn. In 2003, he oversaw a merger between Carnival Corp. and P&O Princess Cruises. Today, Carnival runs cruises under 10 brands.
However, Arison came under fire during Carnival’s bad publicity earlier in the year when a string of its cruise ships suffered through mechanical problems and fires. The most dramatic of them was the Carnival Triumph where passengers were stranded at sea for five days as toilets backed up and air conditioners failed. There were media reports of raw sewage seeping through walls and carpets.
Arison, who also owns the Miami Heat basketball team, took some heat of his own for attending a game while the crisis was ongoing.
Donald founded and led Merisant, a company whose products include sweetener brands Equal and Canderel. He also held multiple senior management roles at Monsanto over the course of 20-plus years, including president of the company’s consumer and nutrition sector and president of its agricultural sector.
The Triumph nightmare was followed up with problems on three other Carnival ships: The Elation, Dream and Legend — all which made big headlines.
None of that helped restore confidence in vacationers who are still wary after the January 2012 sinking of the Costa Concordia, also owned by Carnival.
In its earnings release Tuesday, Carnival said that advance bookings for the rest of 2013 are running behind last year’s levels, even at lower prices. Bookings on its namesake Carnival line are particularly weak.
Arison said in a statement that Carnival is working to market the “truly exceptional vacation values” that cruises offer through travel agents and other industry partners.
“We believe these initiatives, combined with slower supply growth, will lead to increased yields,” he said. “In addition, we remain focused on reducing our fuel dependence. By year end, we will achieve a 23 percent cumulative reduction in fuel consumption since 2005 and expect our research and development efforts in fuel saving technologies to continue to bear fruit.”
Those fuel-savings efforts seem to be paying off. In the quarter that ended May 31, the company saw a 14-percent drop in its fuel bill. The company spent $555 million on fuel, down from $645 million during the same quarter last year. Cruise companies, airlines and other large consumers of fuel typically make bets, called derivatives, on the price of oil to hedge again any sudden spikes. Last year, Carnival lost $145 million in the second quarter on such bets. This year, that loss was narrowed to $31 million.
During the second quarter, the company took delivery of Princess Cruises’ 3,560-passenger Royal Princess, the first of a new class of ships for Princess. Additionally, Carnival Sunshine entered service in May following a $155 million modernization.
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This Week’s Celebrity Instagrams (11/26-12/2)
30 photos Launch gallery
1. Little Legend and Puddy 😍😍😍😍
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2. "You on point Phife?" "all the time,Tip". 💥 #bannedfromnormal
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3. Vegan! The Impossible burger at Crossroads
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4. Lawrence #BeforeandAfterEpisodes 1-4: 184lbs 13% body fatEpisode 8: 196lbs 8% body fat S/O @coachdaveboxing with the works outs and @kildareriordan with the nutrition
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5. Jus haaaanngin out
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6. Meanwhile back at home in Atlanta GA someone mad they not on the 🛳. 😳
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7. No limits... Photo cred: Chris Bridges @ludacris
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8. new new
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9. Apparently my 260lbs is too much for the actual vines in the Hawaiian jungles to hold me without breaking and me falling hundreds of feet. So for safety purposes, I'm forced to swing thru #Jumanjj on wires strong enough to hold 12 adult buffaloes and 1 adult Rock. #OnSet #Jumanji #IronicallyIEatBuffaloDailyForLunch #MoreManThanNatureKnowsWhatToDoWith
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10. hey ma! 🎎#wcw 💙
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11. Surprise visit to our factories!!! #GoodAmerican #USA
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13. Peachy Keen 🔥✨⚡️
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14. If this don't look thankful I don't know what does. Happy Thanksgiving to you and yours. #UltraBlessed #24kMagic #SweetPotatoFly
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15. Late nights @nbcmarlon with the writers... we in here!!!
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16. There goes my baaaaaaaaabbbbyyyyy #QueenKingMagic!!! We're up to something! Ira BIG!!! Stay out our buisness -
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17. You want to win every game you play but when you come home to these faces... who cares. #ILoveYouGirls best part of my day, everyday!
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18. Steady,steady..... full size jenga.. "I got this one "???? Or do I ?
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19. Cornrows kind of day 😉@dontaysavoy2 you convinced me and I love. ❤️️
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20. #BrotherlyLove #tbt
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22. #basel #TeamLOVE @kingcombs
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23. Just introduced a special screening of @directher 's groundbreaking (must see) documentary @13thfilm with my brother @themichaelealy | @unitedblackout #blackoutblackfriday
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24. Me & Vanessa Williams giving #DuckLips #Pose on the set of #DaytimeDivas @vh1 - Coming Soon to a tv near you. Lol. - My make up done by @makeupsurgeon
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25. This picture just makes me wanna praise the Lord, you hear me!!!!!! Yes Lord brotha #TEDDYCAMPBELL What a #man !!! You are everything right on this picture husband ......... #gorgeous #stylish #classy #strong #masculine #king #sexy #debonair #gentlemenstyle And that #bible in your hand just seals the deal for me (probably cause i know that, that is what helped you become just as amazing as you look😘). While my heart and mind experiences the goodness of God at #church on Sundays, my eyes experiences the goodness of Teddy😍. Amen somebody🙌🏽. "Bless the Lord oh my soul and all that is within me bless his holy name" #myman #myhusband #goodman #blackman #dapperman #godlyman #goodfather #mybestfriend
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26. Yesterday was my mama's 53rd birthday!!!!! Got to celebrate with her all day. If this is what I have to look forward to I can't wait. Looking like a soft bucket a cocoa butter. Yaaaaaaaaaas! 😍😍😍 love you mommy!
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27. "Shout out to @PureAtlanta for getting the family right"....I'm loving this jogger. 😍😍
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28. This pic warms my heart ❤️ #myLogiebeans and aunt aunt umba @itowandabraxton 😘
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29. You will always be my baby😜. #HappyBirthdayReginae #mybaby18
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30. GC "Gods Child" Red on Red SweatSuit available now at www.MonicaApparel.com ... Take Your Crown wherever you go!! I'm pictured in a Medium... Go to the site now for other options ... cc: @trukernell
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