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(Reuters) - Cruise operator Carnival on Friday forecast a smaller annual loss than previously estimated and reported a third-quarter profit, benefiting from higher ticket pricing and robust demand that offset the impact of steep fuel costs.
Cruise operators such as Norwegian Cruise Lines and Royal Caribbean have been able to raise ticket prices and still stay cheaper than hotels, drawing younger crowds looking to spend their dollars on experiences rather than big-ticket purchases like gadgets and furniture.
Carnival said it had taken well over 2.5 million guests on their very first cruise so far this year, with first-timers surging to 170% of prior-year levels in the third quarter.
That helped the company's occupancy levels rise to 109% in the quarter from 84% a year ago, returning to pre-pandemic levels.
Still, its shares fell about 4.7% as Carnival forecast an unfavorable net impact of $130 million in the fourth quarter from higher fuel prices and unfavorable currency exchange rates.
Unlike other major cruise operators, Carnival does not hedge against volatility in oil prices.
"We do expect adjusted cruise costs without fuel to be at the high end of our previous guidance range, but somewhat mitigated by the favorability in fuel consumption," said CFO David Bernstein in a post-earnings call. Last year, the company upgraded its global fleet of ships to incorporate technologies to help reduce fuel burn.
Cruise pricing is 35% to 40% cheaper than leisure hotels this year, compared with 20% in 2019, said Redburn Atlantic analyst Alex Brignall. That has helped attract younger guests along with the traditional cruise demographic of well-off, older people.
Carnival posted third-quarter profit of $1.07 billion, or 79 cents per share, compared with a loss of $770 million, or 65 cents per share, a year earlier.
Its quarterly revenue of $6.9 billion beat estimates of $6.69 billion, according to LSEG data, and also hit a record high.
(Reporting by Juveria Tabassum; Editing by Devika Syamnath)
