Carnival Corp reports record operating income

2024-06-28T17:33:31+00:00 June 28th, 2024|Finance|

Carnival Corp has reported that second quarter 2024 net income has improved by nearly $500 mill, compared to 2Q23 and adjusted net income outperformed March guidance by nearly $170 mill.

In addition, the group attained record 2Q24 operating income of $560 mill, nearly five times 2023 levels, on record second quarter revenues of $5.8 bill.

At the same time, full year 2024 net yield guidance (in constant currency) was raised to around 10.25% on continued strong demand, while full year adjusted net income guidance was also raised by about $275 mill.

The total booked position for the remainder of 2024 continued to be the highest on record in both price (in constant currency) and occupancy terms, while early, cumulative booked position for full year 2025 is even higher than 2024 in both price (in constant currency) and occupancy.

Total customer deposits held in 2Q24 reached an all-time high of $8.3 bill, surpassing the previous record by $1.1 bill.

“We have made incredible strides in improving our commercial operations, strategically reallocating our portfolio composition and formulating growth plans, while strengthening even further our global team, the best in the business.

“Off the back of that effort, we closed yet another quarter delivering records, this time across revenues, operating income, customer deposits and booking levels, exceeding our guidance on every measure,” explained Carnival Corp’s CEO, Josh Weinstein.

“Based on continued strong demand trends, we are taking up our expectations for the year with net yields now forecast to top 10%  and propelling us towards double-digit returns on invested capital.

“On our upwardly revised guidance, we will be on average around two-thirds of the way to achieving our three 2026 SEA Change targets after just one year. With two years remaining, it certainly gives us even more conviction in achieving these deliverables,” Weinstein added.

Second quarter net income was $92 mill, or $0.07 diluted EPS. Adjusted net income of $134 mill, or $0.11 adjusted EPS, outperformed March guidance by nearly $170 mill, driven by higher ticket prices, higher on board spend and the timing of expenses between quarters.

Adjusted EBITDA of $1.2 bill was also a record, increasing over 75 %, compared to 2023 and outperforming March guidance by around $150 mill.

The record second quarter revenues of $5.8 bill, with record net yields (in constant currency) and record net per diems (in constant currency) both significantly exceeding 2023 levels.

Gross margin yields increased by nearly 50%, compared to 2023 and net yields (in constant currency) exceeded 2023 levels by over 12%. Net per diems (in constant currency) were up over 6%, compared to 2023, driven by both higher ticket prices and higher on board spending.

Cruise costs per available lower berth day (ALBD) increased 4%, compared to 2023.

“We are very pleased with the continued acceleration of demand for 2025 and beyond, which builds upon the fantastic achievements in 2024 thus far. This positive trajectory is a testament to the successful execution of our demand generation efforts and the delivery of exceptional vacation experiences once on board,” Weinstein added.

Carnival Corp continued to experience strong bookings momentum driven by record booking volumes for 2025 sailings. While still early, the cumulative advanced booked position for full year 2025 is even higher than 2024 in both price (in constant currency) and occupancy.

For 3Q24, the company forecast:

  • Net yields (in constant currency) up around 8%, compared to 2023 levels.
  • Adjusted cruise costs, excluding fuel per ALBD (in constant currency), up about 4.5%, compared to 3Q23.
  • Adjusted EBITDA of around $2.66 bill, up 20%, compared to 3Q23.
  • Adjusted net income of about $1.58 bill, up 35%, compared to 3Q23.

The closing of P&O Cruises (Australia) in March 2025 is the latest in a series of strategic moves designed to increase guest capacity for Carnival Cruise Line (CCL), the highest-returning brand in the company’s portfolio.

This will result in the addition of nine ships to CCL’s fleet since 2019, including the move of three vessels from sister brand Costa Cruises. As a result, plus the company’s commitment to restarting its moderate newbuilding growth programme for its highest returning brands beginning with CCL, the company will increase its percentage from 29% as of 2019 to 37% in 2028.

“Our second quarter refinancing, repricing and debt prepayment activities are all aligned with our path to investment grade as we continue to manage down debt and interest expense, while reducing the complexity of our capital structure.

“During the last 15 months, we prepaid $6.6 bill of debt, which saves a significant amount of interest expense over time, while reducing our secured debt by nearly 40%,” said Carnival Corp’s CFO, David Bernstein.

“Looking forward, we expect substantial free cash flow driven by our ongoing operational execution and the lowest newbuild order book in decades to deliver continued improvements in our leverage metrics and balance sheet,” he added.

The company ended 2Q24 with $4.6 bill of liquidity. As of 31st May, 2024, Carnival’s outstanding debt maturities for the remainder of the year, 2025, and 2026 were $1.2 bill, $1.7 bill, and $2.8 bill, respectively.