Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net income for its second quarter ended May 31, 2007 of $390 million, or $0.48 diluted EPS, compared to net income for the second quarter of 2006 of $380 million, or $0.46 diluted EPS. Revenues for the second quarter 2007 increased to $2.90 billion from $2.66 billion in the second quarter of 2006.

Net income for the six months ended May 31, 2007, was $673 million, or $0.83 diluted EPS, on revenues of $5.59 billion, compared to net income of $631 million, or $0.77 diluted EPS, on revenues of $5.13 billion for the same period in 2006.

Carnival Corporation & plc Chairman and CEO Micky Arison said that second quarter results came in largely in line with expectations.

"Revenues for our North American and European cruise brands were both in line with our expectations. The Caribbean, which still had a relatively high percentage of our capacity during the second quarter, continued to experience price pressure. However, increases in revenue yields from our European brands together with the strengthening Euro and Sterling produced significant revenue yield growth outside of North America,” Arison said. “The decision to expand our European cruise business is working, with the strength of our European brands offsetting some cyclical weakness in the contemporary segment of North America,” Arison noted.

Arison also pointed out that fuel costs came in higher than forecasted, which impacted earnings by approximately $0.02 per share.

Key metrics for the second quarter of 2007 were as follows:

· Net revenue yields (net revenue per available lower berth day) for Q2 2007 increased 0.2 percent (down 2.6 percent on a constant dollar basis) compared to the prior year. Gross revenue yields were approximately equal to the prior year.

· Net cruise costs per available lower berth day (“ALBD”) for Q2 2007 increased 1.3 percent (down 1.5 percent on a constant dollar basis) compared to the prior year. Gross cruise costs per ALBD increased 0.7 percent compared to the prior year.

· Excluding fuel, net cruise cost per ALBD on a constant dollar basis was equal to the prior year. 

· Fuel price increased 7 percent to $333 per metric ton compared to our previous guidance of $310 per metric ton. Fuel price per metric ton in the second quarter of 2006 was $354.

Recently, the company also took steps towards the ongoing modernization of its fleet by selling P&O Australia’s Pacific Star and announcing the sale of Cunard’s Queen Elizabeth 2, which are expected to leave the fleet in March and November of 2008, respectively. In addition, the company took delivery of three highly acclaimed new ships in the second quarter - Princess Cruises’ 3,100-passenger Emerald Princess, AIDA Cruises’ 2,050-passenger AIDAdiva, and Costa Cruises’ 3,000-passenger Costa Serena, all of which are enjoying very successful inaugural seasons in Europe this summer.

The company also noted that it continues to work towards the completion of the previously announced joint ventures with Iberojet in Spain and TUI in Germany. The company continues to expect both joint ventures to be completed in the second half of the year. Both transactions may be subject to regulatory review.

Outlook for the Remainder of 2007

On a cumulative basis, occupancy for advance bookings taken for the second half of 2007 are nicely ahead of last year with pricing on a current dollar basis down slightly compared to last year.

As the company moves into the second half of the year it has more deployments in Europe and less capacity devoted to the Caribbean. “Our North American brands are enjoying strong European and Alaskan programs and our European brands are performing well against strong comparisons last year,” Arison said. He also noted that pricing for Caribbean sailings in the second half of 2007 appears to have stabilized, which he attributed to consumer recognition of the tremendous value proposition of these cruise vacations. Since the beginning of the year, booking volumes for Carnival Cruise Lines, which has the vast majority of its sailings in the Caribbean, are up approximately 18 percent year over year. This compares to a 5.5 percent capacity increase for the full year.

The company’s 2007 full year revenue yield expectations on a constant dollar basis remain on track with the guidance given last March. Excluding fuel, cost guidance for the year also remains unchanged on a constant dollar basis. However, fuel prices have increased significantly since our previous guidance, which has reduced earnings estimates by approximately $0.12 per share for the full year. Based on the above, the company expects full year 2007 earnings per share to be in a range of $2.85 to $2.95, compared to $2.77 per share in 2006. For the third quarter of 2007, the company expects earnings per share to be in the range of $1.60 to $1.62 per share, compared to $1.49 per share in 2006.

       

Full Year 2007

     Third Quarter 2007

Current

Dollars

Constant Dollars

Current

Dollars

Constant Dollars

Change in:

Net revenue yields

       1 %

-1 to -2 %

1 to 2 %

0 to -1 %

Net cruise cost per ALBD

2 to 3 %

  0 to 1 %

2 to 3 %

        1 %

   

                           

 Selected Key Forecast Metrics:

 

  Full Year 2007

     Third Quarter 2007

Fuel price per metric ton

   $346

$375

Fuel consumption (metric tons in thousands)

  3,000

 755

Currency

     Euro

$1.33 to 1

$1.33 to 1

     Sterling

$1.97 to 1

$1.97 to 1

 

The company has scheduled a conference call with analysts at 10:00 a.m. EDT (15.00 London time) today to discuss its 2007 second quarter earnings.  This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc’s Web site at www.carnivalcorp.com and www.carnivalplc.com.