Carnival's Arison steps down as CEO after cruise incidents
The 63-year-old Arison, Carnival's largest shareholder, will hand the job on July 3 to Arnold W. Donald, a director for 12 years, Miami-based Carnival said in a statement. Arison, son of founder Ted Arison, said he suggested splitting the chairman and CEO roles to align the world's largest cruise operator with best practices. The company didn't conduct an outside search, he said on a conference call.
Arison steps aside after crises that generated cable-news coverage and forced price cuts to fill Carnival berths. An engine-room fire on the Triumph ship in February left 3,100 passengers stranded at sea for days with limited food and toilet service. At least two other Carnival vessels were involved in incidents, leading to canceled voyages and customer refunds.
"I view my role as doing whatever Arnold needs me to do," Arison said on a conference call with investors. "It's really going to be a collaborative thing between me and Arnold to decide what are the best uses of my time."
Donald, 58, founded and led Merisant, a company whose products include tabletop sweetener brands Equal and Canderel. He held senior management roles at Monsanto Co. over more than 20 years, including president of the consumer and nutrition unit and president of its agricultural division.
The change is likely to be well-received by investors, said Steven Wieczynski, an analyst with Stifel Nicolaus & Co., in a report to clients, citing the benefits of fresh perspectives on the company's practices and processes. He said the change may also pull Arison, who is also owner of the Miami Heat basketball team, out of the media's spotlight.
"Investors we have spoken to in recent months, particularly in light of the company's recent mishaps, expressed it could work to the company's advantage to bring about change in the executive suite," said Wieczynski, who rates the stock a buy.
Second-quarter profit topped estimates that had been lowered by analysts in the wake of the Triumph incident. Bookings for the remainder of the year are running behind 2012, at lower prices, the company said.
Howard Frank, Carnival's vice chairman, said on the call that the company's troubles this year would hurt profit by 50 cents a share, compared what the company expected before any of the incidents, citing lower revenue and increased repair and marketing costs.
The Carnival brand continues to see lower bookings, Frank said, and it may be two to three years before that line sees its business return to previous levels.
For the second quarter ended May 31, Carnival reported net income almost tripled to $41 million, or 5 cents a share, from $14 million, or 2 cents, a year earlier, when the company was still dealing with the fallout from the shipwreck of its Costa Concordia off the coast of Italy.
Excluding unrealized losses on fuel derivatives, profit fell to 9 cents a share from 20 cents, while exceeding the 7- cent average of estimates compiled by Bloomberg.
Sales fell 1.7 percent to $3.48 billion in the quarter ended May 31. Analysts had projected revenue of $3.56 billion.
Carnival last month lowered its profit forecast for the second half of 2013, saying revenue per customer fell after the price cuts. The company reiterated its full-year profit will total $1.45 to $1.65 a share.
The company has made other personnel changes including naming a new head of corporate communications last week.
"There isn't much encouraging news in today's earnings release, other than, perhaps, new blood at the top," Nomura Securities analyst Harry Curtis said in a research note today.
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