Ticket and onboard revenue were on the rise in the third quarter for Carnival Corporation, as adjusted net income was also higher, rising to $1.7 billion from $1.4 billion, with an earnings beat. Company stocks were up over 4 percent in early Tuesday trading
Related: Carnival Q3 Earnings
Net income was down year-over-year, from $1.4 billion in 2016 to $1.3 billion this year.
The company notably took a noncash impairment charge for ships, trademark and goodwill of $392 million, driven by the “decision to strategically realign business in Australia.”
Arnold Donald, president and CEO, said that that this move was due to the P&O Cruises Australia brand, which has higher operating costs with “less efficient” assets. The company plans to replace these vessels over time with more efficient ships.
“Australia is a strong market for us and will continue to be,” Donald noted.
He added the company continues to be on pace to remove one to two ships a year, replacing them with newer, more efficient ships.
Next year, the neoClassica and Adonia will both leave the fleet.
Revenue was nicely up in all categories in the third quarter for Carnival. Passenger ticket revenue rose from $3.8 billion to $4.1 billion, while onboard spending went from $1.1 billion to $1.2 billion, and tour revenue was also up.
Year-over-year, total revenues for the company in the third quarter rose nicely, from $5 billion to $5.5 billion.
Net income per passenger day was $56.54, down from $62.14 in the third quarter in 2016.
The decrease was attributed to higher operating costs across the board, according to the company’s third quarter earnings report, released before market open on Sept. 26.
Fuel and other ship operating expenses were well up year-over-year.
Expenses are expected to continue to increase in the fourth quarter; the company cited both weather-related voyage disruptions and higher dry-dock costs.
David Bernstein, CFO, said bookings were running ahead of last year at higher prices across the board. Bernstein added company was “very well” booked for the fourth quarter, but did admit there had been some quiet days during the recent trio of hurricanes.
As for China, talk was limited, with Donald noting the successful introduction of Majestic Princess.
Donald, responding to a question on China capacity for 2018, as reported earlier on Tuesday by Cruise Industry News, said it did not matter whether it was flat or down 13 percent, as the market was still in its early stages of development, and could someday be the largest cruise market.