Declining Bunker Prices "Likely to Benefit" Carnival

Lower fuel prices should benefit Carnival

William Blair & Company (William Blair) have said they expect Carnival Corporation & plc (Carnival) to "meet or modestly beat" their Q2 earnings per share (EPS) estimate of $0.05 because of lower bunker fuel prices.

Sharon Zackfia, Chartered Financial Analyst with William Blair, said the "declining bunker fuel prices are likely to benefit EPS by $0.02 to $0.03," but EPS for 2012's second quarter would still be less than the $0.26 EPS for the same quarter last year.

Revenue for the quarter is expected to decline in line with consensus at roughly 2% to $3.55 billion.

For the 2012 financial year as a whole, the falling bunker prices will provide a $0.40 EPS benefit compared to previous fiscal 2012 projections of $1.40 to $1.70.

William Blair said that for the long term, "the viability of the industry remains little changed from before the Concordia incident," noting that bookings for Carnival's Italian subsidiary, Costa Cruses, who operated the vessel rose 25% in April, helped also by lower cruise pricing.

"At 14 times our 2013 estimate, we see value in shares, particularly for longer-term investors," they added.

Ship & Bunker reported earlier this month that shipowners operating in North America could see fuel prices rise as much as 25% when the North American Emissions Control Area (ECA) comes into effect from August 1, 2012, with cruise ship companies facing the additional logistical concern of needing to switch from blended to other fuels depending on where they are operating from spring/summer to winter destinations.

Dual listed on the New York and London Stock Exchanges (NYSE and LSE) Carnival has headquarters in Miami, Florida, and London, England, and operates a fleet of 100 ships with an additional nine ships scheduled for delivery by March 2016.

The company will announce its Q2 2012 results in a live webcast of their "Earnings Conference Call" on Friday June 22, 2012 at 10am ET.