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Marine Log

May 17, 2006

Carnival lowers earnings guidance

Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) yesterday revised its 2006 earnings guidance based on several items, including lower revenue yields, higher fuel costs and a change in accounting.

Earnings for fiscal 2006 are now expected to be in the range of $2.65 to $2.75 per share, roughly in line with 2005 earnings of $2.70 per share. That's down from a March 23 prediction of $2.90 to $3.

The company has reduced its outlook for net revenue yield improvement on a local currency basis ("constant dollar basis") due to further weakness in bookings, principally for sailings in the Caribbean during the second half of 2006.

Net revenue yields (net revenue per available lower berth day) for the year in constant dollars are now expected to increase 1 to 2% versus the company's previous guidance of an increase of approximately 2 to 3%. This will reduce earnings by approximately $0.10 per share.

Because of the strengthening of the euro and sterling relative to the U.S. dollar since the time of its last guidance in March, the company continues to expect full year 2006 net revenue yields in current dollars to increase approximately 1 to 2%.

Since the company's previous guidance, fuel costs have increased significantly and are expected to further impact earnings per share for the year 2006 by approximately $0.07.

The cumulative impact of higher fuel prices for full year 2006 is expected to be $265 million, or $0.32 per share, compared to the prior year.

The company's guidance is based on the forward curve for fuel for the remainder of the year of approximately $372 per metric ton.

The company's guidance for the remainder of the year is based on currency exchange rates of $1.27 to the euro and $1.86 to sterling, which benefits guidance for the year by $0.04 per share compared to previous guidance.

Commencing with the first quarter of 2006, the company will change its accounting policy for dry-dock costs from amortizing them over the time between dry-docks, generally two to three years, to expensing dry-dock costs as incurred.

This change in accounting principle will reduce full year 2006 earnings per share by approximately $0.08, including $0.04 per share in the company's previously released 2006 first quarter, and $0.04 per share over the balance of the year.

Carnival Corporation & plc Chairman and CEO Micky Arison commented, "Although we are disappointed having to lower our guidance for the year, we believe the fundamentals of our business remain sound and our long-term strategies position us well to grow our business in 2007 and beyond."

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