Carnival's second-quarter growth was offset by a decrease in profitability. The company increased revenue 8% from the second quarter of 2009 thanks to an 8% increase in ticket sales and a 10% increase in onboard revenue. Both of these metrics were driven by slightly higher occupancy and an 8% increase in capacity since 2009. However, a 71% increase in the company's cost of fuel drove operating costs to grow faster than revenue. Consequently, operating margins shrank 100 basis points to 10% and operating income declined 1% from the second quarter of 2009.
We believe Carnival's growth opportunities remain intact, as evidenced by the 12% increase in customer deposits. This is the highest growth rate in customer deposits the company has seen in two years. Still, with economic recovery often comes inflation, and Carnival's reliance on fossil fuels could put a damper on free cash flow growth. In healthy markets, Carnival was able to pass on much of its higher fuel expenses with a passenger surcharge. It is yet to be seen whether Carnival would be able to successfully pass on fuel price increases to the consumer in the current recovery. We are leaving our fair value estimate unchanged.
SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk
To view this article, become a Morningstar Basic member.
Register For Free
The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.