Falling oil price stokes Carnival

Cumulative advance bookings for the first three quarters of 2015 are running ahead of last year, leading chief executive Arnold Donald to expect a 2 per cent increase in net revenue yields. Net cruise costs (excluding fuel) could increase by 3 per cent, due to higher dry-dock costs, product development and advertising. But that hardly matters set against the outlook for fuel costs. At current spot rates, the fall in the oil price will boost Carnival's adjusted earnings by 61ȼ a share or nearly a third next year.

The cruising giant nonetheless needs to cut fuel consumption ahead of new regulations coming into effect in the new year. After 1 January 2015, all vessels in the Emission Controlled Area (ECA) of the Baltic Sea, North Sea, English Channel and waters 200 nautical miles from the coast of the US and Canada will need to reduce sulphur emissions to just 0.1 per cent. In the fourth quarter, Carnival's fuel consumption (per available lower berth day) was almost 5 per cent lower than in the previous year - and 25 per cent lower than in 2007.

Carnival wants to capture more of the "new to cruise" market. Advertising spend will therefore increase for a third time in a row this year, having risen 25 per cent since 2012. The group will kick-start its next major marketing campaign in February during the Super Bowl American football tournament.

Management is expecting adjusted EPS of 230-260ȼ for the current year, but Numis reckons this "still looks cautious". The broker is sticking with a forecast of 300ȼ, up from 196ȼ.