Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net income of $193 million, or $0.24 diluted EPS, on revenues of $3.2 billion for its fourth quarter ended November 30, 2009. Net income for the fourth quarter of 2008 was $371 million, or $0.47 diluted EPS, on revenues of $3.3 billion.
Operating results in the fourth quarter were better than the company's September guidance driven by stronger than expected revenue yields, primarily onboard, as well as lower operating costs.
The company reported net income for the full year ended November 30, 2009 of $1.8 billion, or $2.24 diluted EPS, compared to net income of $2.3 billion, or $2.90 diluted EPS, for the prior year. Revenues for the full year 2009 were $13.2 billion compared to $14.6 billion for the prior year.
Micky Arison, Carnival Corporation & plc Chairman and CEO, commenting on full year results said, “We weathered the most challenging economic environment in the company’s history exceptionally well. In 2009, Carnival was the most profitable leisure travel company, which is testament to the strength and quality of our global portfolio of highly recognized brands and their management teams. On significantly reduced global travel demand, net revenue yields for our North American brands fell 13 percent while our European brands’ yields fell a more modest 6 percent (in constant dollars). Despite an 8 percent capacity increase, the stronger performance of our European brands in this economic environment reinforces our strategy to expand our European presence, which will continue in 2010 with four of six newbuilds scheduled for our European brands. In addition, through effective global cost containment initiatives we achieved $170 million of savings since the start of the year, which partially offset the pressure on net revenue yields.”
Key metrics for the fourth quarter of 2009 compared to the prior year were as follows:
• On a constant dollar basis net revenue yields (net revenue per available lower berth day) decreased 10.4 percent for Q4 2009 which was better than our September guidance of down 11 to 13 percent. Net revenue yields in current dollars decreased 8.6 percent due to favorable currency exchange rates. Gross revenue yields in current dollars decreased 9.6 percent.
• Excluding fuel, net cruise costs per available lower berth day (“ALBD”) for Q4 2009 were 2.0 percent lower on a constant dollar basis.
• Including fuel, net cruise costs per ALBD for Q4 2009 decreased 5.6 percent on a constant dollar basis (decreased 3.5 percent in current dollars). Gross cruise costs per ALBD in current dollars decreased 6.1 percent.
• Fuel price decreased 15 percent to $458 per metric ton for Q4 2009 from $538 per metric ton in Q4 2008 and was in line with the September guidance of $465 per metric ton.
Booking volumes continue to be strong and occupancy levels for 2010 are currently in line with 2009. On a cumulative basis, 2010 pricing is slightly behind last year at this time. However, since September, pricing is running well ahead of last year’s lower levels, as a result the company expects to show yield improvement in the second half of 2010.
Looking forward, Arison noted, “We are optimistic that the attractive pricing we have in the marketplace and pent-up demand for vacation travel will continue to stimulate strong booking volumes and lead to a solid wave season. We remain focused on cost controls and expect to reduce non-fuel costs on a per unit basis in 2010 (in constant dollars). Our lean and efficient operating structure leaves us well positioned as the global economy recovers.”
The company forecasts a 2 to 3 percent increase in net revenue yields on a current dollar basis for the full year 2010 as a result of favorable movements in currency exchange rates. On a constant dollar basis, the company expects full year net revenue yields to be flat to up slightly.
The company expects net cruise costs excluding fuel for the full year 2010 to be down approximately 1 to 2 percent compared to the prior year on a constant dollar basis due primarily to lower dry-dock costs and tight cost controls. Based on current spot prices for fuel, forecasted fuel costs for the full year are expected to increase $368 million compared to 2009, costing $0.46 per share. This is forecasted to be partially offset by favorable movements in currency exchange rates worth $0.08 per share.
Taking all the above factors into consideration, the company forecasts full year 2010 earnings per share to be in the range of $2.10 to $2.30 fully diluted, compared to $2.24 for 2009.
First Quarter 2010
First quarter constant dollar net revenue yields are expected to decline in the 3 to 4 percent range (flat to up slightly on a current dollar basis), compared to the prior year. The company expects sequential improvement in net revenue yields as the year progresses. Net cruise costs excluding fuel, for the first quarter are expected to be down 2 to 3 percent compared to the prior year on a constant dollar basis. However, forecasted fuel costs for the first quarter are expected to increase $160 million compared to the prior year, costing $0.20 per share.
Based on current fuel prices and currency exchange rates, the company expects earnings for the first quarter of 2010 to be in the range of $0.08 to $0.12 per share, down from $0.33 per share in 2009 which included $0.04 of nonrecurring gains.
In the first quarter, the company will continue its European expansion when it takes delivery of two new ships, AIDA Cruises’ 2,192-passenger AIDAblu which is set to debut in Europe, and Costa Cruises’ 2,260-passenger Costa Deliziosa which will be the first cruise ship to be inaugurated in Dubai.