Europe Question Marks Follow Carnival Earnings Call

Costa and AIDA are among Carnival's European brands

Strong capacity growth for European cruise brands mixed with macroeconomic concerns were a hot topic on Carnival Corporation’s year-end 2018 and fourth quarter earnings call on Thursday.

Carnival reported record full year and fourth quarter earnings, with net income for the full year 2018 of $3.2 billion compared to $2.6 billion for the prior year.

Sourcing 30 percent of total guests from Europe, Carnival Corporation is leading the way on the continent in the cruise industry, but that may also give it the biggest exposure.

“I would say that, obviously there are some challenges in Europe broadly, Continental Europe from turbulent economies or what have you,” said Arnold Donald, president and CEO.

“But the bottom line is, with everything we just told you our European brands are going to grow in earnings and they're absorbing the capacity. They're going to be better than they've ever been and so for us, it's still very strong.”

With the recent delivery of the AIDAnova, Germany’s leading brand will have 5,200 more berths in service in 2019.

Costa, meanwhile, will introduce two ships next year with the Venezia heading to China and the Smeralda sailing in the Mediterranean when she launches in October.

“But Europe is going to grow earnings. Europe is doing well,” Donald said. “They're absorbing their capacity and they're absorbing it and we'll see, they're working to grow yields in the end and we'll see where we end up.”

Donald noted that the European brands were ahead on bookings despite capacity growth.

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