Blame Brexit for Carnival's Sinking Shares
21 June 2019 - 6:05AM
Dow Jones News
By Asjylyn Loder
Cruise operator Carnival Corp. was the worst performer in the
S&P 500 on Thursday.
One little-noticed culprit: Brexit.
The U.K.'s on-again-off-again exit from the European Union has
rattled the region's economy and put consumers there on edge. That
makes it tougher for Carnival to attract local customers to those
cruise routes.
Carnival unexpectedly announced financial results Thursday
morning, saying profits sank 20% in the second quarter. Worse, the
company offered a gloomier outlook for growth because of softening
demand from customers in France, Italy and Germany, said UBS
leisure analyst Robin Farley. More than 25% of Carnival's customers
come from Europe, she said.
"This is something that's going to affect them in the quarters
ahead," Ms. Farley said.
Carnival's stock fell 7.3% to $48.96 a share.
Competing cruise lines likewise suffered, but not nearly as
much. Royal Caribbean Cruises Ltd. slipped 2.6% to $119.51 a share
while Norwegian Cruise Line Holdings Ltd. dipped 2% to $52.82.
Norwegian likewise sells European tours, but the bulk of its
customers for those routes comes from the U.S., making them less
vulnerable to Brexit worries, Ms. Farley said.
Brexit isn't the only political worry facing cruise operators.
President Donald Trump announced earlier this month that American
cruise ships will be barred from going to Cuba, part of his efforts
to pressure Havana into abandoning its support for Venezuela's
beleaguered government.
Carnival has also taken a hit because of problems with Vista, a
relatively new addition to its fleet that has had to alter its
itinerary several times because of technical problems.
Other leisure stocks also retreated Thursday. Airlines including
American Airlines Group and United Continental Holdings were also
among the worst performers in the S&P 500. The Invesco Dynamic
Leisure & Entertainment exchange-traded fund, which owns stocks
like Walt Disney and Liberty TripAdvisor, slid 0.5% to $43.46 a
share.
--Kimberly Chin contributed to this article.
Write to Asjylyn Loder at asjylyn.loder@wsj.com
(END) Dow Jones Newswires
June 20, 2019 15:50 ET (19:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Carnival (LSE:CCL)
Historical Stock Chart
From Apr 2024 to May 2024
Carnival (LSE:CCL)
Historical Stock Chart
From May 2023 to May 2024