Carnival Corp has announced US GAAP net income of $1.3 bill, or $1.83 diluted EPS, for the third quarter of 2017, compared to US GAAP net income of $1.4 bill for the third quarter of 2016, or $1.93 diluted EPS.
The group’s 3Q17 adjusted net income of $1.7 bill, or $2.29 adjusted EPS, was higher than adjusted net income of $1.4 bill, or $1.92 adjusted EPS, recorded in 3Q16.
Adjusted net income excludes unrealised gains on fuel derivatives of $65 mill and impairments and other net charges of $395 mill for 3Q17 and net gains of $7 mill for 3Q16. Revenues for 3Q17 of $5.5 bill were higher than the $5.1 bill in the previous year.
Carnival Corp President and CEO, Arnold Donald, said, “We delivered another consecutive quarter of strong operational improvement and another third quarter adjusted earnings record. Our ongoing efforts to create demand well in excess of measured supply growth helped to drive 5% higher cruise ticket pricing. We have many innovative efforts to accelerate demand in 2018 and beyond including our recently announced digital streaming channel, OceanView, and our mobile gaming portfolio, PlayOcean, both launching this week.”
The company was due to launch OceanView and PlayOcean at a public relations event in New York City’s Time Square on 28th September.
Gross revenue yields (revenue per available lower berth day or ALBD) increased 5.5%. In constant currency, net revenue yields increased 5.1% for 3Q17, better than June guidance of an increase of around 4%.
Gross cruise costs including fuel per ALBD increased 12.4% (including ship impairment charges). In constant currency, net cruise costs excluding fuel per ALBD increased 0.2%, in line with June guidance of about flat.
Non cash impairment charges for ships, trademark and goodwill of $392 mill was driven by the company’s decision to strategically realign its business in Australia.
Donald commented, “After the earthquakes in Mexico and a very challenging series of hurricanes, our thoughts are with all of those impacted and we are actively contributing to the relief and rebuilding efforts in the Caribbean and the southern US through monetary and other support.
“Many people throughout these areas have been impacted and several ports are temporarily unavailable. Fortunately, our owned destinations including Amber Cove, Dominican Republic; Cozumel, Mexico; Mahogany Bay, Honduras; Half Moon Cay and Princess Cays, Bahamas, as well as more than 40 other ports, plus all those in Mexico, are fully operational and welcoming guests.”
Donald also said that several temporary port closures associated with the storms led to voyage disruptions, which are expected to result in an estimated $0.10 to $0.12 per share reduction in earnings in the fourth quarter.
The company has resumed normal operations, with some itinerary modifications and is continuing to deliver Caribbean cruise vacations to its guests.
At this time (end of September), the company said cumulative bookings for the first half of next year were well ahead of 2016 on both price and occupancy. Since June, booking volumes for the first half of next year have been running ahead of last year at prices that are well ahead.
Donald added, “Our record results, coupled with strong booking trends, have more than offset the anticipated earnings impact from these weather disruptions, enabling us to raise the mid-point of our guidance and positioning us to achieve the higher end of our previous earnings guidance range.
“Our performance affirms conviction in our company’s inherent ability to deliver sustained double digit return on invested capital in 2018 and beyond. We remain on track to achieve record cash from operations of $5 bill this year, and to continue to distribute cash to shareholders through steadily increasing dividends, currently totalling $1.2 bill annually, and opportunistic share repurchases, which are approaching $3 bill cumulatively over the past two years,” he said.
Fourth quarter constant currency net revenue yields are expected to be up by around 1.5 to 2.5%, compared to the previous year.
Excluding the estimated impact from recent weather related voyage disruptions, 4Q17 constant currency revenue yields would have been expected to increase by about 3.5%, some 1.5% higher than the mid-point of September guidance.
Net cruise costs, excluding fuel per ALBD in constant currency for 4Q17, are expected to increase by around 6 – 7%, compared to 4Q16 of which about 1.5% was due to the impact of the recent weather related voyage disruptions and nearly 3% will be due to higher drydock costs, as previously anticipated.
