Carnival Corp. Announces Q3 2018 Earnings

Render of Carnival Sunrise

Carnival Corporation & plc announced U.S. GAAP net income of $1.7 billion, or $2.41 diluted EPS, for the third quarter of 2018, higher than U.S. GAAP net income for the third quarter of 2017 of $1.3 billion, or $1.83 diluted EPS. Third quarter 2018 adjusted net income of $1.7 billion, or $2.36 adjusted EPS, was higher than adjusted net income of $1.7 billion, or $2.29 adjusted EPS, for the third quarter of 2017. Adjusted net income excludes unrealized gains and losses on fuel derivatives and other net charges, totaling $34 million in net gains for the third quarter of 2018 and unrealized gains on fuel derivatives of $65 million and impairments and other net charges of $395 million for the third quarter of 2017. Revenues for the third quarter of 2018 were $5.8 billion, higher than the $5.5 billion in the prior year.

Also in the third quarter, the company authorized the replenishment of its $1.0 billion share repurchase program covering both Carnival Corporation common stock traded on the New York Stock Exchange and Carnival plc ordinary shares traded on the London Stock Exchange. Repurchases will take place in the open market or privately negotiated transactions in accordance with applicable laws, rules and regulations. The share repurchases are subject to prevailing market conditions and other considerations and may continue during any closed periods. All shares repurchased will initially be held in treasury. Carnival Corporation & plc President and Chief Executive Officer Arnold Donald stated, “Strong execution delivered the highest quarterly performance in our company’s history, overcoming fuel and currency headwinds. At the same time, our strong cash flow and balance sheet enabled us to accelerate our opportunistic share repurchase program, investing almost $750 million in Carnival stock since the beginning of the third quarter, bringing the total investment to $4.4 billion in just three years, and leading to the second replenishment of our $1.0 billion repurchase program this year alone.”

Key information for the third quarter of 2018 compared to the third quarter of 2017:
• Gross revenue yields (revenue per available lower berth day or “ALBD”) increased 4.0 percent. In constant currency, net revenue yields increased 2.9 percent, better than June guidance of up 1.5 to 2.5 percent.
• Gross cruise costs including fuel per ALBD decreased 2.6 percent. In constant currency, net cruise costs excluding fuel per ALBD increased 2.7 percent, better than June guidance of up 3.0 to 4.0 percent, principally due to the timing of expenses between quarters.
• Changes in fuel prices (including realized fuel derivatives) and currency exchange rates decreased earnings by $0.08 per share.

Highlights from the third quarter include the signing of an agreement between Princess Cruises and Italian shipbuilder Fincantieri S.p.A to build two new liquefied natural gas (“LNG”) cruise ships that will be delivered in 2023 and 2025, bringing the total to 11 LNG cruise ships on order. P&O Cruises (Australia) announced the sale of Pacific Jewel, which will leave the fleet in March 2019; Holland America Line announced the sale of Prinsendam, which will leave the fleet in July 2019; and P&O Cruises (UK) announced the sale of Oriana, which will leave the fleet in August 2019, bringing the total to four ships leaving the fleet in 2019. Seabourn received approval to begin sailing to Cuba from Miami and San Juan, becoming our third cruise brand currently approved to sail to Cuba. The company released its 2017 Sustainability Report and achieved its goal to reduce its carbon footprint by 25 percent three years ahead of schedule.