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Carnival Corp Reports Q2 2017 Earnings

Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announced U.S. GAAP net income of $379 million, or $0.52 diluted EPS, for the second quarter of 2017 compared to U.S. GAAP net income for the second quarter of 2016 of $605 million, or $0.80 diluted EPS. Second quarter 2017 adjusted net income of $378 million, or $0.52 adjusted EPS, was higher than adjusted net income of $370 million, or $0.49 adjusted EPS, for the second quarter of 2016. Adjusted net income excludes unrealized gains/(losses) on fuel derivatives and other net charges, which totaled gains of $1 million for the second quarter 2017 and $235 million, or $0.31 per share, for the second quarter 2016. Revenues for the second quarter of 2017 of $3.9 billion were higher than the $3.7 billion in the prior year.

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted, “Strong execution drove significant operational improvements, which more than offset the substantial drag from fuel and currency, leading to another second quarter adjusted earnings record. It was reinforcing to see over five percent improvement in cruise ticket prices, affirming our efforts to increase demand by building positive word of mouth through the delivery of exceptional guest experiences as well as our innovative marketing and public relations programs.”

Key information for the second quarter 2017 compared to the prior year:

  • Gross revenue yields (revenue per available lower berth day or “ALBD”) increased 2.7 percent. In constant currency, net revenue yields increased 5.1 percent for 2Q 2017, better than March guidance of up 2.5 to 3.5 percent.
  • Gross cruise costs including fuel per ALBD increased 3.2 percent. In constant currency, net cruise costs excluding fuel per ALBD increased 1.5 percent, in line with March guidance of up 1.5 to 2.5 percent.
  • Changes in fuel prices (including realized fuel derivatives) and currency exchange rates decreased earnings by $0.12 per share.

Highlights from the second quarter include the delivery of Princess Cruises’ Majestic Princess, the first ship tailored for the China market, as well as the addition of AIDAperla to the company’s German brand, AIDA Cruises. Also during the quarter, two additional Princess Cruises ships, Caribbean Princess and Royal Princess, were outfitted with the technical requirements to transition them in early 2018 to the Ocean Platform featuring Ocean MedallionTM. This cutting edge interactive guest experience will debut on Regal Princess this November.

Additionally, Carnival Corporation was ranked among the 100 Best Corporate Citizens by Corporate Responsibility magazineand was ranked number one, globally, for the year’s most engaging and informative sustainability report in the 10th annual Corporate Register Reporting Awards.

 

Outlook

At this time, cumulative bookings for the next three quarters are higher at prices that are well ahead of the prior year. During the quarter, booking volumes for the next three quarters have been running in line with last year, also at prices that are well ahead.

Looking forward, Donald commented, “We are realizing sustained strength in booking trends across all core products. We are delivering on our strategy to grow demand in excess of measured capacity growth while leveraging our industry-leading scale resulting in increased return on invested capital. We are working hard to sustain the momentum. We have accelerated returns to shareholders through our recent dividend increase, with annual dividend distributions now approaching $1.2 billion, and the reauthorization of up to $1 billion in share repurchases.” Donald added that the company has completed $2.7 billion in share repurchases since late 2015.

The company expects full year 2017 net revenue yields in constant currency to be up approximately 3.5 percent compared to the prior year, better than March guidance of up approximately 3 percent. The company expects full year net cruise costs excluding fuel per ALBD in constant currency to be up approximately 1.5 percent compared to March guidance of up approximately 1 percent. Changes in fuel prices (including realized fuel derivatives) and currency exchange rates compared to the prior year are expected to decrease earnings by $0.35 per share.

Taking the above factors into consideration, the company expects full year 2017 adjusted earnings per share to be in the range of $3.60 to $3.70 compared to March guidance of $3.50 to $3.70 and 2016 adjusted earnings per share of $3.45.