NEW YORK, NY--(Marketwire -06/14/12)- The Cruise Industry has experienced a slowdown in business as a result of growing concerns of a potential recession in Europe. Yet some analysts are still keen on the industry as falling oil prices could help significantly boost companies' profits this year. Analysts at investment bank Jefferies have "buy" ratings on both Carnival Corp. and Royal Caribbean Cruises Ltd. Five Star Equities examines the outlook for companies in the Cruise Industry and provides equity research on Carnival Corporation (CCL) and Royal Caribbean Cruises Ltd. (RCL).
Operators' profits could rise as much as 25 percent as a result of low prices for bunker fuel (the fuel used by cruise ships) analysts at Jeffries said in a recent note. Growing concerns of a potential recession in Europe, which accounts for roughly 20 percent of the world's consumption of oil, has seen oil prices slide to eight-month lows Tuesday. Since early May oil prices have fallen nearly 24 percent on fears that the global economy is slowing. Prices for bunker fuel have dropped to $620 per ton; Carnival expected to pay $772 per ton when they calculated their second-quarter earnings guidance.
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Carnival Corporation is a global cruise company and one of the largest vacation companies in the world. Sliding oil prices likely saw Carnival's average fuel costs for this quarter drop to $735 per ton. Jefferies analysts stated that the lower fuel costs would increase Carnival's 2012 per-share earnings by 25 percent.
Royal Caribbean Cruises Ltd. is the world's second largest cruise company, operating the Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Club Cruises and CDF Croisieres de France brands. The company reported revenues improved to $1.8 billion in the first quarter of 2012 compared to $1.7 billion in the first quarter of 2011 as a result of capacity increases and yield improvements.
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