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Carnival - Results ahead of guidance

Nicholas Hyett | 30 March 2016 | A A A
Carnival - Results ahead of guidance

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Carnival plc Ordinary USD1.66

Sell: 1,200.80 | Buy: 1,202.20 | Change -5.80 (-0.48%)
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Carnival Corporation has reported a strong set of first quarter numbers, with adjusted net income almost doubling to $301m (2015: $159m) sending its shares up 3.8%.

Net revenue yields (net revenue per available lower berth day - a key metric for cruise companies) increased 5.7% in constant currency, beating December guidance of 3.5%-4.5%.

Revenues in the quarter rose to $3.7bn, compared to $3.5bn in the prior year, with revenues from ticket and onboard sales both improving. Net cruise costs, excluding fuel, increased 1.6%, also improving on December guidance which suggested an increase of between 2.5% and 3.5%.

The group reported adjusted earnings per share of $0.39 (Q1 2015: $0.20). On an unadjusted basis the group saw EPS of $0.18, compared to $0.06 in Q1 2015, following $159m unrealised losses relating to fuel derivatives.

Since resuming its share purchase programme the company has bought back in the region of 27 million shares, returning £1.3bn to investors in the last six months.

Operating Highlights:

Last week Carnival became the first US based cruise company to be granted approval to sail to Cuba in 50 years, with the 700 passenger Adonia due to begin seven-day cruises in early May.

Changes to the Group's cruise fleet over the quarter include:

  • The German AIDA brand recently took delivery of the AIDAprima
  • Holland America is expected to receive its new flagship Koningsdam within days
  • The group expects further ship deliveries of Carnival Vista in late April and Seabourn Encore in November
  • P&O (Australia) announced that Pacific Pearl would be leaving the fleet in April 2017


Outlook:

Advance bookings for the remainder of 2016 are "well ahead of the prior year at slightly higher prices" with the trends in booking and pricing continuing so far this year.

Second quarter constant currency net revenues yields are expected to increase 1.5% to 2.5% with net cruise costs, ex. fuel, up between 0.5 and 1.5% - both compared to the prior year.

On a constant currency basis Carnival expects full year net revenues yields to increase approximately 3%, with net cruise costs excluding fuel expected to increase by 2%. The group has narrowed its guidance for full year 2016 adjusted earnings from $3.10 to $3.40 in December to $3.20 to $3.40. This compares to 2015 adjusted earnings of $2.70.

President and CEO, Arnold Donald commented:

"Our ongoing guest experience innovations coupled with our increasingly effective marketing and communication efforts have driven additional demand for our brands, resulting in a strong booked position... Additionally, the underlying strength of our operating performance, leading to sustained earnings and cash flow growth, has accelerated the return of capital to shareholders through our stepped up share repurchase program."

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research for more information.