SHARES IN Carnival slid by around a fifth yesterday as the owner of the cruise liner that ran aground off Italy’s west coast over the weekend estimated the initial financial impact of the disaster to be up to $95 million (€75 million).
The company, which owns the Costa Concordia through an Italian subsidiary, Costa Crociere, said the ship was expected to be out of service for the remainder of the year.
Analysts warned of the potential impact on already subdued reservations during the busiest part of the bookings season after the death toll from the ship, carrying more than 4,000 passengers and crew, rose to six after it hit submerged rocks off the Italian island of Giglio in the Tyrrhenian Sea on Friday.
Jamie Rollo of Morgan Stanley cut Carnival’s estimated earnings per share by 30 per cent. Wyn Ellis of Numis said the negative implications for the company would prove short-term. “There will, justifiably, be questions about the adequacy of management and emergency operational procedures on board which may have longer-term cost implications,” he said. “However, we expect that in due course trading will return to normal and, in our view, longer-term valuation fundamentals will not be materially impacted.”
The shares, which had fallen by almost a third in the last year, fell as much as 28 per cent yesterday morning to £16 before recovering in afternoon trading to £18.64, down 17 per cent from Fridays close or a £2.5 billion lower market capitalisation.
Carnival operates more than 100 cruise ships worldwide and owns a range of brands including PO, Cunard and Princess Cruises. It said insurance cover for the Costa Concordia totalled $40 million. Damage to the vessel, which weighed 114,500 tonnes, was insured at $30 million, while third-party personal injury cover was $10 million.
Joy Ferneyhough, analyst at Espirito Santo, said that depending on the ultimate liability claims, the insurance loss could come to as much as $750 million. “This will make this the largest ever marine loss,” she said. – (Copyright The Financial Times Limited 2012)