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Will Carnival's (CCL) Q3 Earnings Suffer due to Higher Costs?

Carnival Corporation CCL is set to report third-quarter 2015 results on Sep 22.

Last quarter, the company posted a positive earnings surprise of 56.25% driven by strong revenues and higher-than-expected revenue yields. Let’s see how things are shaping up for this announcement.

Factors to Consider

Carnival’s high expenses are expected to hurt earnings in the soon-to-be-reported quarter. The company is striving to enhance sustainability, improve environmental friendliness, and meet air emission standards through development of scrubber technology and exhaust-gas cleaning scrubber installations. This would result in higher expenses. Further, the company is incurring marketing costs to enhance cruise bookings.

Also, negative currency translation remains a concern for Carnival in the coming quarter. The U.S. dollar traded at multi-year highs against foreign currencies so far this year and, with a major part of Carnival’s revenues coming from international markets, profits will be hurt by negative currency translation. Further, onboard spending by foreign guests would remain under pressure, thus hurting the top...