Carnival Corporation Posts Record First Quarter Earnings

Carnival Paradise docked in Havana Cuba
Carnival Cruise Line's Carnival Paradise is shown in Cuba.

Carnival Corporation sailed through smooth waters in the first quarter 2018 and is anticipating much for the same in its full year 2018 outlook. 

The world's largest cruise company posted record first quarter 2018 net income of $391 million, up from $352 million in the same quarter a year ago. Revenues also soared -- up $4.2 billion for the first quarter 2018, up from $3.8 billion for the same quarter a year ago. 

Even more telling, the company said: “Cumulative advance bookings for the remainder of 2018 are in line with the prior year at higher prices. Since January, booking volumes for all future periods have been running ahead of prior year at higher prices.”

A Strong Start

Arnold Donald, president and CEO, Carnival Corporation said: “We are off to a strong start to the year achieving another quarter of record earnings on record revenues and exceeding the high end of guidance. This strong operational execution affirms our efforts to create demand in excess of measured capacity growth and exceed guest expectations once onboard.

Arnold Donald Carnival

"Our guest experience efforts, coupled with our ongoing marketing and public relations programs are clearly accelerating cruise demand across the board to drive cruise ticket prices higher," said Donald (shown in the photo above).

The company also said gross revenue yields -- measured as revenue per available lower berth day (ALBD) -- increased 9.2 percent.

Net revenue yields increased 3.9 percent for the first quarter 2018, better than the company’s December guidance to financial analysts about an expected increase ranging from 1.5 to 2.5 percent.

Gross cruise costs including fuel per ALBD increased 9 percent.

The company cited first quarter highlights as the signing of agreements with Meyer Werft to build two new cruise ships powered by liquefied natural gas (LNG). The first is designated for P&O Cruises (UK) to be delivered in 2022 with the second for AIDA Cruises in 2023.

Carnival Corp. also said that during the first quarter 2018, “we continued to drive demand and cruise awareness with successful new marketing efforts.” It cited Carnival Cruise Line’s appointment of Shaquille O’Neal as its new Chief Fun Officer, Cunard Line’s hosting of the “The Greatest Showman” world premiere and broadcast of the red carpet event live on Queen Mary 2, and Costa Cruises launching a new international ad campaign featuring Shakira.  

2018 Outlook

In addressing the company's full year 2018 outlook, Donald said: “The booking strength achieved during this year’s Wave Season, outpacing even last year’s record levels, demonstrates sustained strong demand for our world’s leading cruise brands and delivers further confidence in our raised earnings guidance."

He said the company remains on track to achieve double-digit return on invested capital while continuing to return cash to shareholders through ongoing share repurchases and dividend growth.

Based on current booking trends, Carnival Corporation expects full year 2018 net revenue yields to be up approximately 2.5 percent compared to the prior year, in line with December guidance.

The company expects full year net cruise costs excluding fuel per ALBD compared to the prior year to be up approximately 1 percent, also  in line with December guidance.

Princess Cruises Alaska

Taking all factors into account, the said it expects its full year 2018 adjusted earnings per share to be in the range of $4.20 to $4.40 compared to 2017 adjusted earnings per share of $3.82.

Second Quarter 2018 Outlook

Second quarter net revenue yields are expected to be up approximately 2.5 to 3.5 percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the second quarter of 2018 are expected to increase by approximately 4 percent to 5 percent compared to the prior year.

Carnival Corporation is the world’s largest leisure travel company with a portfolio of 10 brands including Carnival Cruise Line, Princess Cruises (one of its ships is shown in Alaska in the above photo), Holland America Line, Seabourn, P&O Cruises (Australia), Costa Cruises, AIDA Cruises, P&O Cruises (UK) and Cunard, as well as Fathom, no longer a stand-alone cruise operation but an immersion and enrichment experience brand.

Together, the company's cruise lines operate 102 ships with 231,000 lower berths. In addition, 20 new ships are scheduled to be delivered to the brands between 2018 and 2023. 

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