Carnival Corp announced an increased US GAAP net income of $561 mill, or $0.78 diluted EPS, for the second quarter of 2018, compared to $379 mill, or $0.52 diluted EPS for the same period of 2017.
Second quarter 2018 adjusted net income was $489 mill, or $0.68 adjusted EPS, which was also higher than the $378 mill, or $0.52 adjusted EPS, for 2Q17.
Adjusted net income excludes unrealised gains and losses on fuel derivatives and other net charges, totalling $72 mill in net gains for 2Q18 and $1 mill in net gains for 2Q17.
Revenues for the period were $4.4 bill, higher than the $3.9 bill reported in 2Q17.
Carnival Corp President and CEO, Arnold Donald (pictured) said, “We delivered another strong quarter, again achieving record adjusted earnings on record revenues and exceeding the high end of our guidance range. Strong operational execution drove a 30% increase in adjusted earnings affirming the strength of our core strategy to create demand that outpaces measured capacity growth through outstanding guest experience efforts, coupled with innovative actions to increase consideration for cruising across all global markets.”
Key information for the second quarter of 2018 compared to the second quarter of 2017:
⦁ Gross revenue yields (revenue per available lower berth day or ALBD) increased 8.8%. In constant currency, net revenue yields increased 4.8% exceeding March guidance of up 2.5 to 3.5%.
⦁ Gross cruise costs including fuel per ALBD increased 8.2%. In constant currency, net cruise costs excluding fuel per ALBD increased 3.6%, better than March guidance of up 4 to 5%, principally due to the timing of expenses between quarters.
⦁ Changes in fuel prices (including realised fuel derivatives) and currency exchange rates increased earnings by $0.01 per share.
Highlights from the second quarter included the delivery of Carnival Cruise Line’s 26th ship ‘Carnival Horizon’ in March, 2018. In addition, in April 2018 Seabourn took delivery of the fifth all-suite ship in its ultra luxury fleet, ‘Seabourn Ovation’.
As a result of the strong guest response to sailings to Cuba, Carnival Cruise Line received approval for more than 20 additional calls, bringing the total to 40 calls to Cuba in 2019, departing from home-ports in Miami, Fort Lauderdale, Tampa, and Charleston.
Also during the quarter, Carnival Cruise Line unveiled the largest, most technologically advanced operations centre in the cruise industry.
Carnival Corp also increased its quarterly dividend from $0.45 to $0.50 and replenished the share repurchase program to $1 bill.
As for the 2108 outlook, at this time, cumulative advanced bookings for the next three quarters are in line with the previous year at higher prices. Since March, booking volumes for the next three quarters have been running slightly ahead of 2017 at prices that are in line with last year.
Donald added, “Strong operational results coupled with sustained strength in booking trends have mitigated the unfavourable $0.19 per share impact of fuel and currency moving against us since our last update. We remain on track to deliver double digit return on invested capital in 2018.
“In addition, we have accelerated returns to shareholders through our recent dividend increase, with annual dividend distributions now over $1.4 bill and the re-authorisation of up to $1 bill in share repurchases.”
The company invested over $375 mill in share repurchases since the beginning of the quarter, bringing the cumulative total of repurchases to date to over $3.7 bill since late 2015.
Based on current booking trends, the company now expects full year 2018 net revenue yields in constant currency to be up around 3%, compared to 2017, better than March guidance of up about 2.5%.
The company said that it still expects full year net cruise costs, excluding fuel per ALBD in constant currency, compared to the previous year to be up about 1%, in line with March guidance. Changes in fuel prices (including realised fuel derivatives) and currency exchange rates are expected to decrease earnings by $0.19 per share, compared to March guidance and $0.13 per share compared to 2017.
Taking the above factors into consideration, the company expects full year 2018 adjusted earnings per share to be in the range of $4.15 to $4.25, compared to 2017 adjusted earnings per share of $3.82.
Third quarter 2018 constant currency net revenue yields are expected to be up around 1.5 to 2.5%, compared to 3Q17. Net cruise costs, excluding fuel per ALBD in constant currency, for 3Q18 are expected to increase by around 3 to 4%, compared to 3Q17.
Changes in fuel prices (including realised derivatives) and currency exchange rates are expected to decrease earnings by $0.06 per share compared to 3Q17. Based on the above factors, the company expects adjusted earnings per share for 3Q18 to be in the range of $2.25 to $2.29, versus 2017 adjusted earnings per share of $2.29.
