Carnival Corporation & plc reported net income of $1.3 billion, or $1.65 diluted EPS, on revenues of $4.8 billion for its third quarter ended August 31, 2008. Net income for the third quarter of 2007 was $1.4 billion, or $1.67 diluted EPS, on revenues of $4.3 billion.
Carnival Corporation & plc Chairman and CEO Micky Arison indicated third quarter results were better than the previous guidance provided in June. This was due primarily to lower than expected cruise costs, including an insurance recovery of $0.02 per share.
“We are very pleased with our results for the third quarter which is seasonally our strongest of the year. Despite the uncertain economy, all our major brands globally performed quite well with increased corporate-wide revenue yields. Our North American brands, which had an increase in yields, continued to benefit from strength in Caribbean demand. Our European brands introduced significant new capacity which was well-received in their respective markets,” he said. The company’s European brands benefited from a 24 percent capacity increase, although local currency yields were lower against strong comparisons from the prior year.
Arison said cost controls also played an important role during the quarter. “Despite inflationary pressures, each of our operating units continued to demonstrate solid cost containment and our ongoing focus on fuel conservation is clearly translating into measurable savings.” Higher fuel prices however cost the company $230 million, or $0.28 per share for the third quarter compared to the same quarter a year ago.
For the remainder of 2008 and the first half of 2009, occupancy levels for advance bookings are running slightly behind the prior year, with ticket prices for these bookings at higher levels.
Looking forward Arison noted, “While occupancy levels at this time are slightly behind the historically high levels of last year, they remain well ahead of 2006. Although bookings have slowed compared to the strong booking levels of a year ago, pricing is holding up well given the current difficult economic environment. This is a testament to the strength of our global cruise brands which are the most recognized in the world. The value of brand recognition and the consumer confidence they inspire is an important asset for us in uncertain economic times.”
Despite the recent reduction in bunker prices, fourth quarter fuel expense is still expected to increase by $135 million compared to 2007, which reduces earnings by $0.17 per share. As a result, the company expects earnings for the fourth quarter of 2008 to be in the range of $0.36 to $0.38 per share, down from $0.44 per share in 2007.
During the fourth quarter, the company will add one new ship to its fleet, Princess Cruises’ 3,080-passenger Ruby Princess, which will offer seven-day Western Caribbean cruises from Fort Lauderdale.