Despite Hurricanes, Carnival Corp.’s 2017 Earnings Beat Forecast

Despite a wild year that included a severe hurricane season and security concerns abroad, Carnival Corporation beat expectations for 2017 and is looking ahead to a strong booking performance in 2018, the company said in its fourth quarter and full year 2017 earnings report.

Carnival Corp. reports that its U.S. GAAP net income for the full year 2017 was $2.6 billion, down from $2.8 billion for the prior year. The cruise company’s adjusted net income of $2.8 billion, which excludes unrealized gains on fuel derivatives, however, was up from the adjusted net income of $2.6 billion in 2016.

Carnival Corp. President and CEO Arnold Donald noted that the full year 2017 earnings exceeded the company’s guidance by $0.22 per share, with record cash from operations of $5.3 billion despite a significant drag from fuel and currency. Ticket prices were up 4.5 percent in 2017.

In the fourth quarter of 2017, Carnival Corp.’s earnings took a hit of approximately $0.11 per share from voyage disruptions due to a severe hurricane season, in which Hurricane Harvey closed ports in Texas and Louisiana and Hurricanes Irma and Maria devastated parts of Florida and the Caribbean, the cruise company said. The company’s fourth quarter net income of $546 million was down from $609 million last year, and its adjusted net income (excluding fuel) of $452 million was down from $491 million last year.

2018 Outlook

Looking ahead to next year, Carnival Corp. reports that its cumulative advance bookings are up from last year and at higher prices. The company forecasts its 2018 net revenue yields to be up approximately 2.5 percent over this year. Full year net cruise costs, excluding fuel, are forecast to rise approximately 1 percent over this year.

“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,” Donald said. “We have numerous efforts underway to keep the momentum going in 2018 and beyond.” He noted that the company would continue its efforts to drive awareness of cruise travel, including its recently-announced partnership with Univision, as well as further roll out a new revenue management system.

Robin Farley, a cruise analyst with UBS Investment Bank, said that Carnival Corp. has outperformed its guidance in each of the last three years despite disruptions such as the Zika virus, hurricanes, and security concerns in Europe. She also said that the company’s early look at 2018 bodes well for Royal Caribbean Cruises Ltd. and Norwegian Cruise Line Holdings.

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