Carnival Corp has announced US GAAP net income of $1.7 bill, or $2.41 diluted EPS, for the third quarter of 2018, higher than the equivalent net income of $1.3 bill, or $1.83 diluted EPS for 3Q17.
The 3Q18 adjusted net income was $1.7 bill, or $2.36 adjusted EPS, compared with an adjusted net income of $1.7 bill, or $2.29 adjusted EPS, for the same quarter of 2017.
Adjusted net income excluded unrealised gains and losses on fuel derivatives and other net charges, totalling $34 mill in net gains for 3Q18 and $65 mill plus impairments and other net charges of $395 mill for 3Q17.
Revenues for 3Q18 were $5.8 bill, higher than the $5.5 bill recorded in the previous year.
In the third quarter, the company authorised the replenishment of its $1 bill share re-purchase programme covering both Carnival Corp common stock traded on the New York Stock Exchange and Carnival plc ordinary shares traded on the London Stock Exchange.
Re-purchases will take place in the open market or privately negotiated transactions in accordance with applicable laws, rules and regulations. They are subject to prevailing market conditions and other considerations and may continue during any closed periods. All shares re-purchased will initially be held in treasury.
Carnival Corp President and CEO, Arnold Donald (pictured), said, “Strong execution delivered the highest quarterly performance in our company’s history, overcoming fuel and currency headwinds. At the same time, our strong cash flow and balance sheet enabled us to accelerate our opportunistic share repurchase programme, investing almost $750 mill in Carnival stock since the beginning of the third quarter, bringing the total investment to $4.4 bill in just three years, and leading to the second replenishment of our $1 bill re-purchase programme this year alone.”
Key information for 3Q18, compared to 3Q17 were:
• Gross revenue yields (revenue per available lower berth day or ALBD) increased 4%. In constant currency, net revenue yields increased 2.9%, better than June guidance of up 1.5% to 2.5%.
• Gross cruise costs, including fuel per ALBD, decreased 2.6%. In constant currency, net cruise costs, excluding fuel per ALBD, increased 2.7%, better than June guidance of up 3% to 4%, principally due to the timing of expenses between quarters.
• Changes in fuel prices (including realised fuel derivatives) and currency exchange rates decreased earnings by $0.08 per share.
Based on 3Q18 results and booking strength for 4Q18, the company now expected full year 2018 net revenue yields in constant currency to be up around 3.5%, compared to 2017, better than June guidance of up about 3%.
Carnival said that it expected full year net cruise costs, excluding fuel per ALBD, in constant currency compared to the prior year to be up around 1.5%, versus June guidance of about 1%, primarily due to the accounting treatment for ships sold during the quarter.
Changes in fuel prices (including realised fuel derivatives) and currency exchange rates are expected to decrease earnings by $0.06 per share compared to June guidance and $0.18 per share compared to the prior year.
Taking the above factors into consideration, the company forecast full year 2018 adjusted earnings per share to be in the range of $4.21 to $4.25, compared to 2017 adjusted earnings per share of $3.82.
Donald commented, “We are on track to achieve double digit return on invested capital in 2018 as we deliver upon our strategy to create demand in excess of measured capacity growth, all while containing costs and leveraging our industry leading scale.
“Going forward, we remain on a path toward continued growth in earnings and returns, driven to a greater degree by capacity increases, as we add more efficient ships, replacing less efficient capacity. We believe the plans we have put in place will maximise returns to shareholders over time as we continue to execute in an industry that is both under-penetrated and capacity constrained.
“At the same time, we remain committed to returning cash to shareholders as evidenced by the growth in our recurring dividend, currently distributing $1.4 bill annually, accompanied by our recently replenished share re-purchase programme,” he said.