Carnival posts small 4Q profit as a few passengers begin to return after mechanical woes

Carnival Cruise Lines posted a small but surprising fourth-quarter profit as it began to win back passengers after a year when its ships were often seen in the news behind tow boats.

Carnival has had two rough years, with the Contra Concordia running aground near Italy in 2012, and mechanical problems and fires this year.

The bad publicity is still hurting the company. Net income for the fourth quarter fell 29 per cent to $66 million, or 8 cents per share, compared with a year earlier when it earned $93 million, or 12 cents per share.

Its adjusted profit was 4 cents per share. That was still better than the break-even result expected by analysts surveyed by FactSet.

The quarter’s results were helped by “accelerated progress in Carnival Cruise Lines’ brand recovery,” said president and CEO Arnold Donald in a written statement. He took over after Micky Arison, who had been CEO since 1979, was replaced.

In February, a fire on the Carnival Triumph knocked out power and stranded passengers for five days in the Gulf of Mexico. Two other vessels later lost power and had to be towed as well. Dozens of future sailings were cancelled as the company repaired those ships. In April, it said it would spend $300 million to add backup generators, upgrade fire safety and improve engine rooms on all of its ships.

Carnival has been using discounts to get passengers back onto its ships. It has also been reaching out to travel agents, launched a new ad campaign, and issued a hassle-free vacation guarantee.

Some of its efforts worked, as the number of passengers rose 3 per cent from a year earlier. But the amount of revenue per berth, per day declined about 1 per cent. The company predicted a decline of 3 per cent to 4 per cent for the upcoming quarter.

Since September, booking volumes for the first three quarters of next year “are running well ahead of last year’s levels,” though at lower prices. Overall bookings for all of 2014 are still behind the pace of last year, the company said.

Revenue for the September-November quarter rose 2 per cent to $3.66 billion, also better than analysts expected.

Carnival said it expects costs per berth to rise 4.5 per cent to 5.5 per cent compared to a year earlier because it’s spending more on advertising. It said it expects an adjusted first-quarter loss of 7 cents to 11 cents per share. Analysts had been expecting a loss of 7 cents per share.

Shares of Miami-based Carnival Corp. rose $1.52, or 4 per cent, to $38.63 in afternoon trading.