The political unrest in the Middle East and North Africa, the Japan earthquake and nuclear alert and higher fuel prices combined to buffet Carnival Corporation.
Pricing for the Europe, Australia and Asia brands has been “significantly affected” by the prolonged conflict in the Middle East and North Africa regions and earthquake in Japan, which required last minute deployment changes for more than 300 cruises.
Brands operating in southern Europe were particularly affected as more than 40% of their ship deployment was in affected areas.
Reporting its second quarter performance Carnival said cumulative advance bookings for the remainder of the year are at higher prices with lower occupancies over last year.
Bookings for the second half of 2011 in the past six weeks are “well ahead” of the prior year for the North America brands, as well as Europe, Australia and Asia brands. Pricing for North America brands remains strong, the group said.
The world’s largest cruise group saw second quarter profit drop to $206 million on revenues of $3.6 billion against a profit of $252 million and revenues of $3.3 billion in the same period last year.
While North American cruising remains strong, the company expects yields to be hit in its European, Asian and Australasian brands. Fuel prices in the three months to May 31 rose by 35% to $673 per metric ton from $498 per metric ton a year earlier.
Chairman and chief executive Micky Arison said: “Our North America brands’ revenue yields increased 3% in the second quarter while yields for our Europe, Australia and Asia brands were up slightly, having been affected by the geo-political events which unfolded in the Middle East and North Africa, as well as the earthquake and nuclear disaster in Japan.”
But he added that the revenue yield improvement was more than offset by higher fuel prices which cost the company approximately $150 million.
Looking forward, Arison said: “Our North America brands continue to perform well, benefiting from the gradual economic recovery, with strong yield growth expected in the second half of the year.
“We expect lower yields for our Europe, Australia and Asia segment in the second half of 2011 as a result of the significant deployment changes in Europe. Despite the considerable challenges we have faced this year, the long-term fundamentals of our business remain sound.”
The company took delivery of its 100th ship, Carnival Cruise Lines’ 3,690-passenger Carnival Magic, in April. Two additional ships, AIDA Cruises’ 2,194-passenger AIDAsol and Seabourn’s 450-passenger Seabourn Quest were also delivered in the second quarter.
A contract was finalised for the construction of a 3,611-passenger ship for P&O Cruises, due to be delivered in February 2015. The order marks Carnival Corporation’s first ship delivery for 2015, aligned with its strategy to have two to three ships constructed a year.