CCL to Spend $180M to Reduce Pollution - Analyst Blog

Carnival Corporation (CCL) has recently formed an alliance with the U.S. Environmental Protection Agency (EPA), the U.S. Coast Guard and Transport Canada to introduce an exhaust gas cleaning technique in its ships. Carnival is likely to invest $180 million for the installation. The technology will substantially reduce the amount of sulfur and black carbon in the emission from the cruise ships and marine vessels, thereby reducing air pollution.

Carnival is the first in the cruise industry to deploy "scrubber technology" which is generally used by power plants, factories and large vehicles. Under the technology, the company will be using low-sulfur marine gas oil.

Carnival is currently awaiting the approval of the flag states to test the new system. Primarily, the company will be installing the system across 32 ships under Carnival Cruise Lines, Holland America Line, Princess Cruises and Cunard brand. In this regard, the company will be redesigning and improving the operations of its ship's engine rooms over the next three years.

The new system will bring in an era of pollution control thus improving public health standards. Carnival expects to use the technology in all of its ships in the near future to efficiently reduce fuel costs and raise profitability.

The Zacks Rank #4 (Sell) company has been striving hard for the last few quarters to reduce its fuel consumption. The company is making itinerary changes to curtail fuel costs. Owing to the company's fuel saving effort, it has saved 5 cents per share in the second quarter of 2013. It is on track to achieve its target of reducing cumulative consumption by 23% from 2005 through 2013.

Some other companies in the leisure and recreational services industry that are performing well include Rick's Cabaret International Inc. (RICK), Cedar Fair, L.P. (FUN) and International Speedway Corp. (ISCA). Rick's Cabaret has a Zacks Rank #1 (Strong Buy), while Cedar Fair and International Speedway carry a Zacks Rank #2 (Buy).