Carnival Corporation's fourth quarter profits fall by 55%

By Melanie Hall

Carnival Corporation’s profits fell by 23% in 2012, with a 55% drop in the fourth quarter, following its “most challenging” year after the Costa Concordia tragedy in January.

The company revealed its full year and fourth quarter earnings today, which showed that its net profits in the 12 months to November 30 were $1.47 billion, down from $1.9 billion at the same time last year.

Its fourth quarter profits are down from $217 million in 2011 to $98 million in 2012, a drop of 55%, although Carnival Corporation’s chairman and chief executive Micky Arison said that the quarter’s earnings “were better than anticipated”.

Commenting on the full year’s earnings, Arison said: “As a result of the Costa Concordia tragedy in January, the past year has been the most challenging in our company’s history.

“However, through the significant efforts of our brand management teams, we were able to maintain full year 2012 net revenue yields - excluding Costa - in line with the prior year."

Arison added that unfavourable changes in fuel prices and currency exchange rates reduced earnings by $300 million compared to the prior year.

During the fourth quarter, Carnival reached an agreement on the construction of two new cruise ships - a 2,660-passenger ship for its Holland America Line brand to be delivered in 2015 and a 4,000-passenger vessel for its Carnival Cruise Lines brand to be delivered in 2016. Both are the largest ships ever built for those brands.

Carnival has forecast a decline of 2-3% in its revenue yields in the first quarter of 2013 but has predicted it will improve during the remainder of next year for the North American brands and Costa, although it said its European brands continue to be hit by a “deteriorating economic environment”.

“We remain well positioned for a recovery in 2013 and beyond evidenced by the demonstrated resilience of our global portfolio of cruise brands as consumers continue to capitalize on cruising’s superior value versus land-based vacation alternatives,” said Arison.

“We continue to focus on a measured growth strategy through the introduction of two to three new ships per year and the development of emerging cruise markets in Asia.”