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| Arnold Donald, president and CEO, Carnival Corporation |
Carnival Corporation reported improved $49 million in net income for the first quarter of 2015, versus a net quarterly loss of $20 million for the same period a year ago. Revenues were down slightly -- $3.5 billion, versus $3.6 billion the previous year. The income results include unrealized losses on fuel derivatives.
Overall, “the year is off to a strong start -- achieving significantly higher earnings than the prior year and our previous guidance,” said Arnold Donald, president and CEO, Carnival Corporation. He also said “onboard revenue initiatives drove particularly strong improvement in the first quarter with onboard yields more than 8 percent higher than prior year.”
Two brands that have had their challenges the past few years – Carnival Cruise Lines and Costa Cruises – also showed positive results for the first quarter. “The Carnival Cruise Line brand continued to outperform” with significant revenue yield growth, said Donald, noting that it remains on track for a strong year.
In turn, Costa’s Asia operations achieved double-digit revenue yield growth, affirming that region’s pent-up demand and long-term growth potential.
Financial Tidbits?
- First quarter net revenue yields were up 2 percent compared with results from the same quarter a year ago.
- First quarter net cruise costs excluding fuel increased 2.4 percent year-over-year, which the company said was due to higher dry-dock costs and advertising expenses.
- Fuel prices declined 38 percent for the first quarter, while fuel consumption decreased 3.7 percent.
- Changes in currency exchange rates during the first quarter reduced earnings by $0.06 per share.
- Looking to the second quarter, net revenue yields are expected to rise 2 to 3 percent compared to the prior year.
- Net cruise costs excluding fuel for the second quarter are expected to be up 6.5 to 7.5; that’s due to higher drydock costs, mostly in the second quarter.
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| Carnival Fantasy // Photo by Susan J. Young |
Full Year 2015
Carnival Corporation brands’ cumulative advance bookings for the rest of 2015 are running ahead of the prior year and at higher prices. Based on current booking strength, the company expects full year 2015 net revenue yields to increase 3 to 4 percent.
“We are experiencing an ongoing improvement in underlying fundamentals based on our successful initiatives to drive demand,” said Donald. “Our efforts to further elevate our guest experience are clearly resonating with consumers and, notably, improving the frequency and retention of our loyal guests.”
The company is also seeing results from its ongoing public relations efforts and creative marketing campaign designed to attract newcomers to cruising. “Our multi-faceted campaign built around the Super Bowl garnered five billion media impressions before the commercial aired and has exceeded 10 billion impressions to date,” Donald said.
He also cited the idea that the recent delivery of Britannia, the largest cruise ship built for United Kingdom service and christened by Queen Elizabeth II, is showcasing cruising on a global scale.
Interestingly, Donald stated, “Consistent with many global companies, the strengthening of the U.S. dollar has hampered our full year earnings expectations, masking the 3 to 4 percent…yield increase our collective brands are expecting to achieve."
Still, he said initiatives to drive both ticket and onboard revenue yields have improved financial performance: "We remain on track toward our goal of achieving double-digit return on invested capital in the next three to four years."