Accounting change hurts Carnival
Change in dry-dock expense policy costs cruise operator £29m
A profits warning by cruise operator Carnival that is expected to reduce
forecasts by $170m (£90m) has been partly attributed to changes in its
The group, which owns P&O Cruises, has been hit by lower bookings
following fears of a repeat of Hurricane Katrina, rising fuel bills and a fire
on one of its boats. However, around £29m of the profit downgrade has been
blamed on a switch in its accounting policy for dry-dock costs.
Previously the company had amortised the costs over the time between
dry-docks, generally two or three years, but will now expense dry-dock costs as
incurred, knocking $0.08 per share off profit estimates.
The companies net income forecast, despite benefits from currency
fluctuations, has now been reduced to £1.2bn.