Carnival’s (CCL) second-quarter earnings have cruised past analysts’ expectations, despite a string of mediocre results.
The world’s largest cruise company reported diluted earnings per share of $0.14, surpassing the expectation of $0.02 EPS based on 17 analyst estimates compiled by Bloomberg. Net income was $80 million, almost six times higher than the average analyst estimate of $13.9 million.
The results were due to better than anticipated sales across the Carnival’s 10 cruise brands, which include the Princess Cruises and Holland America Line, as well as unexpectedly lower cruise costs, the company said on Tuesday.
“We benefited from effective marketing initiatives, which combined a gradually improving economic environment, led to yield improvement for our continental European brands,” CEO Arnold Donald, said in a statement. “In addition, we achieved a 6% improvement in fuel consumption.”
Donald had previously voiced concerns about growing sales given the challenges the industry faces when trying to recruit new cruisers who have negative preconceived notions. This is especially true in the U.S., which accounts for about 52% of worldwide cruisers.
Much growth has been focused in markets that haven’t been exposed to the cruise experience, such as China, where Carnival has positioned a fourth ship to take advantage of the world’s fastest growing cruise market.
Carnival expects annual sales to be higher this year compared to 2013, although fuel prices and currency exchange rates reduced the cruise company’s overall earnings. Forecasted earnings per share for 2014 declined $0.06 compared to Carnival’s March guidance to a range of $1.60 to $1.75.
“Collectively, our brands are gaining momentum in our efforts to drive higher ticket prices,” said Donald. “We believe we have reached a positive inflection point for our company as we return to earnings growth.”