COVID-19 hits Carnival’s bottom line

2020-03-26T22:43:09+00:00 March 26th, 2020|Finance|

Carnival Corp suffered a USGAAP net loss of $781 mill, or $(1.14) diluted EPS, for the first quarter of 2020, compared tonet income of $336 mill, or $0.48 diluted EPS for 1Q19.


The net loss included $932 mill of goodwill and ship impairment charges, reduced by net gains on ship sales.

An adjusted net income of $150 mill, or $0.22 adjusted EPS, was recorded for 1Q20, compared to an adjusted net income of $338 mill, or $0.49 adjusted EPS, for 1Q19. This excluded the net charges of $932 mill and net charges of $2 mill for 1Q19.

COVID-19’s impact on 1Q20 net loss was around $0.23 per share, which included cancelled voyages and other voyage disruptions, but excluded the impairment charges. Other previously voyage disruptionsalso impacted 1Q20 results by about $0.12 per share.

Total 1Q20 revenues were $4.8 bill, higher than $4.7 bill in the previous year.

For the first half of 2021, booking volumes through 1stMarch, 2020, ran slightly higher than in the previous year. Also, for the first half of 2021 and during the two weeks ended 15thMarch, 2020, the Corporation booked 546,000 occupied lower berth days (OLBD), albeit considerably behind the previous year’s total. As of 15thMarch, 2020, cumulative advanced bookings for the first half of 2021, were slightly lower than the prior year.

Wave season started strongly with booking volumes for the three weeks ending 26thJanuary, 2020, running higher than the previous year for the remaining three quarters of the year on a comparable basis.

For the seven week period beginning 26thJanuary, 2020 and ending 15thMarch, 2020, booking volumes for the remainder of the year were meaningfully behind those of 2019 on a comparable basis, as a result of the effects of COVID-19.

As of 15thMarch, 2020, cumulative advanced bookings for the remainder of 2020, were meaningfully lower than the previous year at prices that were also considerably lower on a comparable basis, reflecting the impact of the virus.

Carnival had previously announced a voluntary, temporary pause of its global fleet operations across all of its brands. The company saidthat it believed the ongoing effects of COVID-19 on its operations and global bookings will have a material negative impact on its financial results and liquidity.

In addition, the effects of COVID-19 on the shipyards where its ships are under construction, will result in a delay in ship deliveries.

As a result, thecorporation said it was taking additional actions to improveliquidity, including capital expenditure and expense reductions, and pursuing additional financing.

Given the uncertainty of the situation, the Corporation said it was unable to provide an earnings forecast, however, it expected a net loss on both a US GAAP and adjusted basis for the fiscal year ending 30thNovember, 2020.

As of 29thFebruary, 2020, the Corporation had a total of $11.7 bill of liquidity. This included $3 bill of immediate liquidity, plus $2.8 bill from four committed export credit facilities that are available to fund the originally planned ship deliveries for the remainder of this year and $5.9 bill from committed export credit facilities that are available to fund ship deliveries originally planned in 2021 and beyond.

On 13thMarch, 2020, the Corporation fully drew down its $3 bill multi-currency revolving credit agreement in order to increase its cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 outbreak.

Substantially all of the Corporation’s assets, with the exception of certain ships with a net book value of about $6 bill, as of 29thFebruary, 2020, are currently available to be pledged as collateral, the company explained.