Carnival Corporation has announced U.S. GAAP net income for the full year 2017 of $2.6 billion, or $3.59 diluted EPS, compared to $2.8 billion, or $3.72 diluted EPS, for the prior year.
Full year 2017 adjusted net income of $2.8 billion, or $3.82 adjusted EPS, was higher than adjusted net income of $2.6 billion, or $3.45 adjusted EPS, for the full year 2016, according to the company's earnings release.
Adjusted net income excludes unrealized gains on fuel derivatives of $227 million and previously reported impairments and other net charges of $390 million for the full year 2017. For the full year 2016, adjusted net income excludes unrealized gains on fuel derivatives of $236 million and other net charges of $37 million.
Revenues for the full year 2017 were $17.5 billion, $1.1 billion higher than the $16.4 billion in the prior year.
Carnival Corporation President and Chief Executive Officer Arnold Donald noted, “We exceeded the high end of our original full year 2017 guidance by $0.22 per share, achieving record cash from operations of $5.3 billion and another adjusted earnings per share record despite a significant drag from fuel and currency. Our full year performance was led by over 4.5 percent growth in ticket prices while overcoming a variety of headwinds, affirming that our core strategy, which is anchored in delivering exceptional guest experiences, driving demand through marketing programs to increase cruise consideration, and introducing new more efficient ships through measured capacity growth all while leveraging our scale, can deliver consistent earnings improvements.”
Gross revenue yields (revenue per available lower berth day or “ALBD”) increased 6.8 percent. In constant currency, net revenue yields increased 4.2 percent for 4Q 2017, better than September guidance of up 1.5 to 2.5 percent.
Gross cruise costs including fuel per ALBD increased 9.7 percent. In constant currency, net cruise costs excluding fuel per ALBD increased 6.1 percent, in line with September guidance of up 6.0 to 7.0 percent.
Changes in fuel prices (including realized fuel derivatives) and currency exchange rates decreased earnings by $0.03 per share.
Voyage disruptions due to hurricanes reduced fourth quarter earnings by approximately $0.11 per share.
At this time, Carnival said cumulative advance bookings for full year 2018 are ahead of the prior year at higher prices. Since November, booking volumes for 2018 have been running well ahead of the prior year at higher prices.
Donald added: “Despite booking disruptions from this year’s multiple hurricanes, we are still heading into 2018 with a stronger base of business and higher prices than last year. We have numerous efforts underway to keep the momentum going in 2018 and beyond, from our innovative approaches to increase consideration for cruising, including our recently announced partnership with Univision, to the further roll-out of our state-of-the-art revenue management system. In 2018 we also look forward to the delivery of four new cutting-edge ships, Carnival Horizon, Seabourn Ovation, AIDAnova, and Nieuw Statendam to further our strategic fleet enhancement program.”
Based on current booking trends, the company expects full year 2018 net revenue yields in constant currency to be up approximately 2.5 percent compared to the prior year. The company expects full year net cruise costs excluding fuel per ALBD in constant currency to be up approximately 1.0 percent compared to the prior year.
As a result of higher fuel prices, forecasted fuel costs for the full year 2018 are expected to increase approximately $117 million compared to the prior year, net of realized fuel derivatives, reducing earnings by $0.16 per share. This is partially offset by favorable movements in currency exchange rates, which are forecasted to increase earnings by $0.08 per share.
Taking the above factors into consideration, the company expects full year 2018 adjusted earnings per share to be in the range of $4.00 to $4.30, compared to 2017 adjusted earnings per share of $3.82.
Donald added, “We remain on track to achieve double digit return on invested capital in 2018. We are committed to the continued distribution of cash to shareholders through increasing dividends, currently totaling $1.3 billion annually, and ongoing share repurchases, which have exceeded $3 billion since late 2015.”
First quarter constant currency net revenue yields are expected to be up approximately 1.5 to 2.5 percent compared to the prior year. Net cruise costs excluding fuel per ALBD in constant currency for the first quarter of 2018 are expected to increase by approximately 2.0 to 3.0 percent compared to the prior year. Changes in fuel prices (including realized fuel derivatives) and changes in currency exchange rates compared to prior year are expected to decrease earnings by $0.02 per share. Based on the above factors, the company expects adjusted earnings per share for the first quarter 2018 to be in the range of $0.37 to $0.41 versus 2017 adjusted earnings per share of $0.38.