Carnival Corporation & plc announced non-GAAP net income of $98 million, or $0.13 diluted EPS, for the fourth quarter of 2012. Reported U.S. GAAP net income, which included net unrealized losses on fuel derivatives of $5 million, was $93 million, or $0.12 diluted EPS. Net income for the fourth quarter of 2011 was $217 million, or $0.28 diluted EPS. Revenues for the fourth quarter of 2012 were $3.6 billion compared to $3.7 billion for the prior year.
Non-GAAP net income for the full year 2012 was $1.5 billion, or $1.88 diluted EPS, compared to net income of $1.9 billion, or $2.42 diluted EPS, for the prior year. Full year 2012 U.S. GAAP net income was $1.3 billion, or $1.67 diluted EPS, which included the non-cash write down for Ibero Cruises' goodwill and trademark assets of $173 million. Revenues for the full year 2012 were $15.4 billion compared to $15.8 billion for the prior year.
Carnival Corporation & plc Chairman and CEO Micky Arison noted that fourth quarter earnings on a non-GAAP basis were better than anticipated in the company's September guidance. Stronger than expected revenue yields combined with lower than expected fuel costs more than offset higher than anticipated operating costs.
Commenting on full year 2012, Arison stated, "As a result of the Costa Concordia tragedy in January, the past year has been the most challenging in our company's history. However, through the significant efforts of our brand management teams, we were able to maintain full year 2012 net revenue yields (excluding Costa) in line with the prior year. In addition, we drove down net cruise costs, excluding fuel, slightly and fuel consumption by four percent." Arison added that unfavorable changes in fuel prices and currency exchange rates reduced earnings by $300 million, or $0.39 per share, compared to the prior year.
Arison noted, "Cash from operations of $3.0 billion was more than sufficient to fund $1.8 billion in net capital investments and positioned the company with excess free cash flow to return to shareholders. Our regular quarterly dividend of $0.25 per share, combined with our recently announced special year-end dividend of $0.50 per share, will result in $1.2 billion of dividend distributions to our shareholders. Additionally, since the start of the fiscal year we purchased 3.5 million of the company's shares in the open market at a cost of $120 million."
Key metrics for the fourth quarter 2012 compared to the prior year were as follows:
- On a constant dollar basis, net revenue yields (net revenue per available lower berth day or "ALBD") decreased 4.5 percent for 4Q 2012, which was better than the company's September guidance, down 5 to 6 percent. Gross revenue yields decreased 5.7 percent in current dollars.
- Net cruise costs excluding fuel per ALBD decreased 0.9 percent in constant dollars, less than the September guidance, down 2 to 3 percent. Gross cruise costs including fuel per ALBD in current dollars decreased 2.5 percent.
- Fuel prices increased 5.4 percent to $716 per metric ton for 4Q 2012 from $680 per metric ton in 4Q 2011 and were better than the September guidance of $739 per metric ton.
During the fourth quarter, the company also announced it had reached an agreement for the construction of two new cruise ships – a 2,660-passenger ship for its Holland America Line brand to be delivered in 2015 and a 4,000-passenger vessel for its Carnival Cruise Lines brand to be delivered in 2016. Both are the largest ships ever built for those brands.
Full Year 2013 Outlook
Since September, booking volumes for the first three quarters, including Costa, are running in line with the strong volumes experienced last year at slightly lower prices. At this time, cumulative advance bookings for 2013 continue to be behind the prior year at slightly lower prices.
Based on current booking trends, the company forecasts full year 2013 net revenue yields, on a constant dollar basis, to be up 1 to 2 percent. Revenue yields (constant dollars) are expected to decline 2 to 3 percent in the first quarter and improve sequentially during the remainder of 2013 based on a recovery in ticket prices and occupancy for the North American brands and Costa. However, the company's European brands continue to be negatively impacted by a deteriorating economic environment.
The company expects net cruise costs excluding fuel per ALBD for the full year 2013 to be up 1 to 2 percent on a constant dollar basis. Taking the above factors into consideration, the company forecasts full year 2013 non-GAAP diluted earnings per share to be in the range of $2.20 to $2.40, compared to 2012 non-GAAP diluted earnings of $1.88 per share.
Looking forward, Arison stated, "We remain well positioned for a recovery in 2013 and beyond evidenced by the demonstrated resilience of our global portfolio of cruise brands as consumers continue to capitalize on cruising's superior value versus land-based vacation alternatives. We continue to focus on a measured growth strategy through the introduction of two to three new ships per year and the development of emerging cruise markets in Asia."
Arison added, "Based on 2013 guidance, we estimate that cash from operations will reach $3.3 billion for the year while our capital commitments will be just $2.0 billion. As a result, we anticipate significant free cash flow in 2013, which we intend to continue to return to shareholders."
During 2013, the company expects to carry over 10 million guests on its global fleet and will introduce two new ships, the 2,192-passenger AIDAstella which is scheduled for delivery in March and the 3,560-passenger Royal Princess, which is scheduled for delivery in May.
First Quarter 2013 Outlook
First quarter constant dollar net revenue yields are expected to decrease 2 to 3 percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the first quarter are expected to be down 1.5 to 2.5 percent on a constant dollar basis compared to the prior year.
Based on the above factors, the company expects non-GAAP diluted earnings for the first quarter 2013 to be in the range of $0.03 to $0.07 per share versus 2012 non-GAAP earnings of $0.02 per share.