Carnival, the world's largest cruise ship operator, has underscored the tough trading conditions in the leisure sector after being forced to cut its full-year outlook because of offering sharp discounts to fill its ships.

The company, listed in New York and London, has reduced the 2009 guidance for its earnings per share to $2.10 to $2.30, compared with its previous expectations of $2.25 to $2.75.

Micky Arison, chief executive, said while several of the group’s cruise lines were receiving record booking numbers, these were being achieved at significantly lower prices.

“As we had anticipated, people continue to book cruise vacations while seeking the best possible values,” he said. “Though pricing is down significantly we continue to fill our ships by reaching people who might not have otherwise considered a cruise vacation.”

Carnival, which has 11 brands, including P&O Cruises and Cunard Line, also lowered its guidance on net revenue yield – an important industry metric that measures the amount cruise companies make from their passengers after subtracting expenses.

The group, citing the deteriorating economic conditions in the US and UK, said it expected net revenue yield for the year to decrease 10-12 per cent on a constant dollar basis, compared to the 6-10 per cent decline it was expecting before.

Wyn Ellis, an analyst at Numis Securities, said: “It is clear that while consumer demand is still there, it is only there at a price. Hence full-year yield guidance has been cut.”

The reduced guidance came in spite of the 5 per cent increase in pre-tax profits reported by Carnival during the first quarter. Although revenue for the three months to end of February fell 9 per cent to $2.9bn, profits before tax rose from $226m to $238m (£162m) as a result of lower fuel costs and tighter cost control.

In November, Carnival suspended its dividend to shore up its balance sheet ahead of $3.5bn in capital expenditure planned for the year. The shares, down 30 per cent over the past year, rose 46p to £16.56.

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