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Fuel Costs Cut Into Carnival’s 4th Qtr.

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(Source: Carnival Cruise Lines) Carnival Breeze

(Source: Carnival Cruise Lines) Carnival Breeze

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MIAMI (CBSMiami/AP) — Stung by rising fuel costs, the Miami base Carnival Cruise Line’s net income dropped 13 percent in the fourth quarter.

The company met profit expectations to end the year Tuesday, but adjusted net income expectations going forward left investors disappointed and shares slid 2 percent in early trading. The cruise operator also cut its outlook for the first quarter of next year.

Chairman and CEO Micky Arison said that net yields, the amount a cruise company makes from its passengers after removing expenses, should continue on a slow recovery next year though economic conditions remain challenging.

Carnival, which operates Holland America Line, Princess Cruises and Carnival Cruise Lines, reported earnings of $217 million, or 28 cents per share, in the quarter compared with $248 million, or 31 cents per share, a year earlier.

Fuel prices rose 39 percent to $680 per metric ton in the quarter. The company said it recently started a fuel derivatives program to help offset some of the risk tied to potentially sharp spikes in fuel prices.

Net revenue yields, which measure the amount a cruise company makes from its passengers after removing expenses, rose 1.5 percent. Carnival had predicted the figure would increase 1 percent to 2 percent. Full-year earnings slipped 4 percent to $1.91 billion, or $2.42 per share, from $1.98 billion, or $2.47 per share, in the previous year.

Fuel prices climbed 32 percent for the year, which lowered full-year earnings by 68 cents per share.

Annual revenue increased 9 percent to $15.79 billion from $14.47 billion.

Looking ahead to 2012, Carnival says that cumulative advance bookings are at slightly higher prices but with slightly lower occupancies when compared with a year earlier.

The company anticipates 2012 adjusted earnings of $2.55 to $2.85 per share, compared to the forecast of $2.77 per share by analysts polled by FactSet.

The cruise company foresees net revenue yields climbing 1 percent to 2 percent, on a constant dollar basis.

For the first quarter, Carnival predicts adjusted earnings of 6 to 10 cents per share. Analysts expect earnings of 13 cents per share. Net revenue yields are predicted to climb 1.5 percent to 2.5 percent on a constant dollar basis compared with the year-ago period.

Fuel costs are anticipated to rise $93 million from the prior-year period, which the company said will cost it an additional 12 cents per share.

Shares fell 74 cents to $32.06.

(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2010 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

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