Carnival Boosts Outlook as Cruise Demand Breaks More Records

(Bloomberg) -- Carnival Corp. raised its full-year earnings outlook after strong demand for cruises helped it post a surprise profit last quarter.

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Adjusted earnings before interest, tax, depreciation and amortization will be about $5.83 billion this year, according to a statement Tuesday. That’s up from Carnival’s March forecast of about $5.63 billion and above the average analyst projection of $5.7 billion.

Record-setting demand is helping cruise companies sell tickets at higher prices, partly driven by the value of sailings versus land-based travel helping to attract new customers. That trend appears to be extending into 2025, with Carnival’s booked position for next year already ahead of 2024 levels on both occupancy and ticket prices.

“We are very pleased with the continued acceleration of demand for 2025 and beyond,” Chief Executive Officer Josh Weinstein said in the statement.

Carnival turned just its second profit since 2020 in the second quarter, reporting 11 cents a share against an expected 2 cent a share loss. Sales also beat Wall Street’s forecasts.

Standard & Poor’s upgraded Carnival’s debt rating to BB after the results, leaving it now just two notches away from investment grade. Carnival has prioritized reducing its debt over expanding its fleet, paying off $6.6 billion in the past 15 months while its new-build order book fell to its lowest in decades.

Shares gained as much as 8.4% in New York, the most since February, helping offset Carnival’s 12% drop so far this year. Peers Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings also rose.

Analysts were largely encouraged by the results and new insights into booking trends. “The company putting 2025 observations in writing for the first time is certainly a positive,” Patrick Scholes, managing director at Truist Securities, wrote in a note.

Of the three ocean cruise operators, only Royal Caribbean’s shares are up this year, rising nearly 20%. Norwegian is down about 13%. Viking Holdings Ltd., the leader in luxury river cruises, has surged almost 30% since its public debut in April.

(Updates share move, adds information on rating upgrade and analyst commentary.)

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