Carnival Corp’s record fourth quarter and full year revenues

2020-01-13T11:00:23+00:00 January 13th, 2020|Finance|

Carnival Corp has reported US GAAP net income of $3 bill, or $4.32 diluted EPS, for the full year 2019 ending 30th November, compared to $3.2 bill, or $4.44 diluted EPS, recorded in fiscal 2018.

Adjusted net income was a record $3 bill, or $4.4 adjusted EPS, compared to $3 bill, or $4.26 adjusted EPS, for 2018.

The adjusted net income excluded net charges of $52 mill for 2019 and net gains of $123 mill for the previous year.

Record total revenues for 2019 were $20.8 bill, higher than $18.9 bill recorded in 2018. Gross cruise revenues of $20.4 bill were higher than $18.6 bill for the previous year.

In constant currency, net cruise revenues of $16 bill were higher than $15.4 bill for 2018, an increase of 4%.

For the fourth quarter of fiscal 2019, US GAAP net income was $423 mill, or $0.61 diluted EPS, compared to $494 mill in 4Q18, or $0.71 diluted EPS.

Fourth quarter 2019 adjusted net income of $427 mill, or $0.62 adjusted EPS, compared to $492 mill, or $0.70 adjusted EPS, for 4Q18.
Adjusted net income excluded net charges of $5 mill in 4Q19 and net gains of $2 mill for 4Q18.

Record 4Q19 total revenues were $4.8 bill, higher than $4.5 bill reported for 4Q18.

Gross cruise revenues of $4.7 bill were higher than $4.4 bill for 4Q18. In constant currency, net cruise revenues of $3.7 bill, compared to $3.7 bill for 4Q18, an increase of 0.5%.

Carnival Corp President and CEO, Arnold Donald noted, “Exceeding our fourth quarter guidance enabled us to have strong full year earnings per share and another year of record adjusted earnings. We overcame a high number of unusual events compounded by a significant downturn in leisure travel demand for our large source markets in Continental Europe.

“In that environment, to achieve record revenues and adjusted earnings is an accomplishment for any consumer company, a credit to our 150,000 team members and demonstrates the robustness of our business model,” he claimed.

Highlights during the fourth quarter were:

• Princess Cruises’ ‘Sky Princess’ and Carnival Cruise Line’s ‘Carnival Panorama’ were both delivered in October, 2019.

• P&O Cruises (Australia) entered into an agreement to sell ‘Pacific Dawn’ and ‘Pacific Aria’, which will both leave the fleet in 2021.

• The company began construction of the cruise industry’s first cruise terminal in Japan, located at Sasebo.

Other highlights included the delivery of ‘Costa Smeralda’, the second of the 11 ordered LNG-fuelled ships. In addition, AIDA announced it will be the world’s first cruise company to test the use of fuel cells, which will be powered by hydrogen derived from methanol and enable the power supply on board.

This is in addition to its recently announced innovation, the first lithium-ion battery storage system ever to be deployed on a cruise ship – ‘AIDAperla’.

The company has also formalised a collaborative partnership with The Bahamas to fund and support flood damage repairs and basic restoration efforts at Rand Memorial Hospital, the primary hospital in Freeport, Grand Bahama Island.

The company also remains fully committed to its new developments on Grand Bahama Island and Half Moon Cay.

As for the outlook, Carnival is entering fiscal 2020 with a record booked occupancy position. At the middle of last month, cumulative advanced bookings for the full year 2020 were slightly ahead of the prior year at prices that are slightly lower, compared to 2019 on a comparable basis, which does not include the net revenue yields brand mix headwind of about 0.5% for the full year 2020.

Booking volumes at the beginning of 4Q19 were impacted by Hurricane ‘Dorian’. During the last couple of months, bookings have been running higher with prices that are in line for the full year 2020, compared to 2019 on a comparable basis.

Based on current booking trends, the company expects full year 2020 constant currency net cruise revenues to be up around 5%, with capacity growth of 6.6%, and net revenue yields in constant currency expected to be down about 1.5%, compared to the previous year.

Net revenue yields for the full year 2020 included a brand mix headwind of around 0.5% and an additional headwind of about 0.5%, primarily due to ship delivery delays, including that of the ‘Mardi Gras’.

The company expects full year net cruise costs, excluding fuel per ALBD, in constant currency to be in line with the previous year, which also included an impact of over 0.5% caused by ship delivery delays and an accounting difference.

In 2020, Carnival will increase its usage of Marine Gasoil (MGO) as a percent of total fuel consumption as a result of IMO2020. MGO is currently anticipated to represent 40 – 45% of fuel consumption for full year 2020, compared to 21% for full year 2019.

The company’s use of HFO is expected to be 55- 50% of fuel consumption for full year 2020 and all other fuel types are expected to be around 5%.

The impact in fuel mix changes, fuel prices and currency exchange rates are expected to increase earnings by $0.17 to $0.24 per share, compared to the previous year.

Full year 2020 earnings are expected to include $0.12 to $0.17 per share incremental impact from previous events and voyage disruptions, including ship delivery delays.

Based on the above, the company expects full year 2020 adjusted earnings per share to be in the range of $4.3 to $4.6, compared to 2019 adjusted earnings per share of $4.4.

Donald added, “Despite the negative impacts from the tail effect of the high number of unusual events in 2019, as well as a continuation of the negative headwinds facing our Continental European source markets, our brands continue to perform and we are at record booked occupancy levels for 2020 on peak capacity growth.

“Given the evolution of conditions in Continental Europe, and recognising the timing of significant capacity increases, we have in our European portfolio, we are taking a number of actions to adapt over time. Globally, we are also taking actions to further stimulate demand and increase our cost efficiencies in 2020 and beyond.

“With annual cash from operations of $5.5 bill, our balance sheet is strong as are our brands and we believe we are well positioned to return to double-digit earnings growth and elevated ROIC over time,” he stressed.

As for sustainability, Donald said, “We remain committed to being a leader in the development of environmentally friendly fuel solutions as demonstrated by the introduction of the first cruise ships with the ability to be solely powered by LNG.

“Our significant investments in pilot programmes for both fuel cell technology and electrical energy storage capabilities using battery systems, help us innovate as we move toward zero emissions. These efforts were further reinforced by our commitment to the Getting to Zero Coalition,” he concluded.