Carnival Corp. Reports Higher 2nd Quarter 2015 Earnings

Princess Cruises, one of the Carnival Corp. brands, is expanding in Asia. // Photo by Susan J. Young 

Carnival Corporation posted second quarter 2015 net income of $222 million on revenues of $3.6 billion. This compares with $98 million in net income and revenues of about the same for the same quarter a year ago. The 2015 results include $34 million in unrealized gains on fuel derivatives and $7 million in restructuring expenses.

“We more than doubled our second quarter earnings versus the comparable period a year ago and significantly exceeded our quarterly earnings guidance,” said Arnold Donald, president and CEO, Carnival Corporation. “Our initiatives to create demand and leverage our scale benefited both cruise ticket prices and onboard revenues contributing to 5 percent revenue yield improvement…this quarter.”

Of note? Donald said while all of Carnival’s North American brands enjoyed strong revenue yield improvement, “our Carnival Cruise Line brand performed particularly well again this quarter.”

He thanked the cruise lines’ teams around the world for their consistent delivery of guest experiences, as well as travel agent partners for their strong support.

Carnival Cruise Line performed well in the second quarter 2015. Photo by Susan J. Young

Key Metrics

Among the financial highlights for the second quarter 2015 compared to the prior year were as follows:

- Net revenue yields increased 4.1 percent for the second quarter 2015. That’s better than the company’s guidance of up 2 to 3 percent.

- Gross revenue yields decreased 3.5 percent in current dollars due to changes in currency exchange rates.

- Net cruise costs excluding fuel increased 6.1 percent due to an increase in drydock days. Costs, however, were better than the March guidance.

- Fuel prices declined 37 percent.

- Changes in currency exchange rates reduced earnings by $.10 per share.

Booking Volumes & Outlook for 2015 

Travel agents clearly have been busy, as during the past 13 weeks, Carnival Corp.’s fleet-wide booking volumes for the next three quarters were well ahead of last year. However, those were at slightly lower prices due to the impact of currency transactions – essentially a higher U.S. dollar versus the euro.

Currently, Carnival Corp. says cumulative advance bookings for the next three quarters are well ahead of the prior year. Again, those are at slightly lower prices due to the currency situation.

“Current strength in booking volumes clearly demonstrates strong consumer demand for our brands, leaving less inventory remaining for sale and building confidence in achieving significant revenue yield improvement this year,” said Donald.

He noted that the corporation will step up its marketing investment for the remainder of the year to further solidify its base of business for 2016 and drive continued yield improvement. The company has a goal of a double-digit return on its invested capital.

Full year 2015 net revenue yields are expected to rise 3 to 4 percent, the company said. That excludes currency impacts.

The company now expects full year 2015 net cruise costs excluding fuel to rise 3 percent compared to the prior year. That’s slightly higher than what the company told financial analysts in March, mainly due to increased advertising.

The company has increased its full year 2015 earnings per share guidance to range from $2.35 to $2.50, which compares to last year’s $1.93 per share.

Significant Milestones

The company’s earnings press release cited what it called “significant milestones” during the second quarter. One was the launch of “fathom”, Carnival Corp.’s 10th brand. Starting in spring 2016, fathom will sail to the Dominican Republic where guests will work alongside locals for what the company calls “transformational community impact." Agents can read our previous story on the launch of Fathom here:

Costa will have four ships deployed in China starting in 2016. // Photo by Susan J. Young

Additionally, the company cited Costa Cruises’ year-round service from Shanghai on Costa Serena and the deployment of Costa Fortuna to China in 2016. At that point, Costa will have four ships dedicated to Chinese guests.

Princess Cruises also has an expanded Asia presence; a new Princess ship entering service in mid-2017 will be based in China year-round and custom-designed specifically for Chinese guests.

In addition, earlier this month Carnival Corporation finalized a contract with Meyer Werft to build four next-generation ships that will feature the largest guest capacity in the world.

They'll also be the first cruise ships to be powered at sea by liquefied natural gas, the world’s cleanest-burning fossil fuel.

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