Accidents Hurt Carnival Results

CEO Arnold Donald said it typically takes a brand two to three years to recover from a negative incident

Carnival Cruises Corp. & Plc. (Carnival) reports its profits dropped 29 percent year-over-year to $66 million in the fourth quarter of its 2013 fiscal year, ended November 30, as the company faced continuing fallout from accidents over the past two years.

Revenues grew 2 percent to $3.7 billion, and the company benefited from lower-than-expected bunker costs as it paid $671 per metric tonne (pmt) over the quarter, compared with $716 pmt in Q4 2012.

In September, it predicted that it would pay $687 pmt in the quarter.

"Accelerated progress in Carnival Cruise Lines' brand recovery had a positive impact on fourth quarter results," President and CEO Arnold Donald said in the earnings statement.

"A steady stream of innovative product initiatives, the launch of a nationwide marketing campaign and travel agent outreach program, as well as an industry-leading vacation guarantee fueled the brand's improvement."

Speaking to analysts on the company earnings call, Donald said it typically takes two to three years to recover from a negative incident.

Carnival's Costa Concordia cruise ship sank off the coast of Italy in January 2012, and its Carnival Triumph was stranded in the Gulf of Mexico for several days in February 2013 after an engine fire.

"The Costa recovery has been impeded somewhat by the weak European economy and just the weakness in a lot of the markets where Costa sources their passengers," Donald said.

"With regards to Carnival, we've experienced some accelerated recovery."

Donald also disputed a CNN report regarding the Triumph and called a lawsuit by passengers against the company "frivolous."

The news network had reported that Carnival allowed the ship to sail despite being aware of possible problems with its engines and fuel lines.