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Thursday, September
20, 2000
Cruise prices still under
pressure
Carnival Corporation Chairman and CEO Micky Arison sees pressure
on cruise line pricing continuing into the fourth quarter. Carnival
Corporation today reported reported net income of $396.2 million
on revenues of $1.23 billion for its third quarter ended August
31, 2000. That compared to net income of $415.1 million on revenues
of $1.16 billion for the same quarter in 1999.
Net income for the nine months ended August
31, 2000, was $771.7 million on revenues of $2.93 billion, compared
to $776.2 million on revenues of $2.71 billion for the same
period in 1999.
Higher revenues during the third quarter
of 2000 were primarily driven by an 11.3 percent increase in
cruise capacity provided by Carnival Cruise Lines' 2,758-passenger
Carnival Triumphand Holland America Line's 1,440-passenger Volendam
and Zaandam.
Arison said that operating results were
largely in line with expectations given the continued pressure
on pricing, higher fuel costs and the loss of five seven-day
cruises due to the unscheduled drydocking of Carnival Cruise
Lines' Paradise. Nonetheless, cruise operating earnings grew
by $4.8 million in the third quarter compared to the same period
in 1999.
"Although we were not satisfied with
third quarter financial results, our ships operated at a 112.4
percent occupancy rate, reflecting a 13.9 percent increase in
passengers carried during the quarter,'' Arison said. He also
pointed out that the company has carried close to 2 million passengers
in the first nine months of 2000 compared to 1.75 million for
the same period in 1999. ``The record number of passengers carried
will provide the various Carnival cruise brands with a growing
base of satisfied guests to draw upon, which bodes well for future
business,'' Arison explained.
For fiscal 2001, Carnival's cruise capacity
is expected to grow 11.5 percent. excluding Costa Crociere. The
company expects to close on the purchase of the remaining 50
percent interest in Costa , Europe's leading cruise company,
from Airtours, plc within the next two weeks.
"Carnival's 100 percent ownership
of Costa is expected to give the company the platform for further
expansion into the European marketplace, one of the fastest growing
cruise markets in the world,'' Arison said. He added that Costa
is already expanding with the July 2000 debut of the 2,112-passenger
CostaAtlantica, which has garnered rave reviews in Europe. Also,
Costa recently announced the signing of a new contract for the
construction of a CostaAtlantica sister ship, which is expected
to be delivered in 2003.
Providing an early glimpse into fiscal
2001, Arison indicated that he is encouraged by strengthening
booking trends during recent months, which may suggest the company
has reached a bottom in cruise pricing. "If these stronger
booking trends continue, we are optimistic that we will start
to see positive earnings growth for the full fiscal year 2001,''
he added. "However, largely because of the unusually high-priced
millennium sailings in the first quarter of this year, net earnings
for the first fiscal quarter of 2001 are expected to be lower
than this year's first quarter.''
Inland operator warns on earnings
Kirby Corporation anticipates that third quarter 2000 net earnings
will be in the range of $.36 to $.38 per share, or approximately
10% lower than the current First Call consensus estimate of $.41
per share. Net earnings for the 1999 third quarter
were $.34 per share.
Based in Houston, Kirby Corporation, Texas,
operates 774 inland tank barges, with 14.0 million barrels of
capacity, and 229 towing vessels.I ts diesel engine services
operation provides after-market service for medium-speed diesel
engines used in marine, power generation and rail applications.
To date, says Kirby, third quarter volumes,
with the exception of refined product volumes, are as anticipated.
Refined product volumes were strong in the first and second quarters,
but weakened during the third quarter. In addition, fuel prices
have increased significantly. Approximately 75% of Kirby's transportation
revenues are from term contracts which contain cost escalation
clauses allowing increases in fuel costs to be passed through
to its customers. However, there is typically a 30 to 90 day
delay before contracts are adjusted for fuel costs. When fuel
prices decrease, the same is true, but in Kirby's favor. The
balance of Kirby's transportation revenues are generated by spot
market business. Market forces dictate whether spot market pricing
will allow Kirby to recover fuel cost increases. Currently, the
spot market is not allowing Kirby to pass on fuel cost increases.
The increase in fuel costs in August and
September is anticipated to cost Kirby an estimated $.02 per
share of net earnings for the 2000 third quarter. The average
cost of fuel consumed was $.75 cents per gallon in July, increasing
to an average of $.97 per gallon in August. Currently, Kirby's
fuel cost is $1.05 per gallon.
Kirby says it is "also experiencing
some additional administrative costs" in the development
of management information systems for the future, overtime associated
with the integration of Kirby and Hollywood and vessel crew training
costs associated with a very tight vessel crew labor market.
Kirby's diesel engine services segment
third quarter results are anticipated to be below the reported
results for the first and second quarters of 2000. The segment
continues to experience soft engine rebuild and rail businesses.
The Gulf Coast drilling and offshore supply vessel market has
improved, but not to a level offsetting shortfalls in other areas.
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