Carnival Corporation & Plc Reports Fourth Quarter Results and Record Full Year Earnings
MIAMI, Dec. 20, 2007 /PRNewswire-FirstCall/ -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net income for its fourth quarter ended November 30, 2007 of $358 million, or $0 .44 diluted EPS, compared to net income of $416 million, or $0.51 diluted EPS, for the fourth quarter 2006. Revenues for the fourth quarter 2007 increased to $3.1 billion from $2.8 billion for the fourth quarter 2006.
The company reported record net income for the full year ended November 30, 2007 of $2.4 billion, or $2.95 diluted EPS, compared to net income of $2.3 billion, or $2.77 diluted EPS, for the prior year. Revenues for the full year 2007 increased to $13.0 billion from $11.8 billion for the prior year.
Carnival Corporation & plc Chairman and CEO Micky Arison said that fourth quarter results came in at the high end of the company's guidance as stronger pricing on close-in bookings was partially offset by higher than expected fuel costs.
"Our brands enjoyed strong yield growth in our fourth quarter as the continued recovery of Caribbean business led to higher yields for our North American brands while our European brands were bolstered by the stronger Euro and Sterling. However, continually rising fuel costs and the expected higher dry-dock costs held back our fourth quarter performance," Arison said.
Commenting on the full year results Arison noted, "Our European brands enjoyed another record year absorbing substantial new capacity and driving significant improvement in unit operating profit. Although operating performance for our North American brands was hampered by pricing pressure in the Caribbean early in the year, demand for Caribbean cruises strengthened considerably as the year progressed and we expect this trend to continue into 2008. Despite the continuing increases in fuel costs throughout the year, we still managed a six percent improvement in earnings over 2006."
Key metrics for the fourth quarter of 2007 were as follows:
-- Net revenue yields (net revenue per available lower berth day) for Q4
2007 increased 4.9 percent (1.1 percent on a constant dollar basis)
compared to the prior year. Gross revenue yields increased 4.4 percent
compared to the prior year.
-- Excluding fuel, net cruise cost per available lower berth day ("ALBD")
for Q4 2007 increased 4.2 percent on a constant dollar basis compared
to the prior year primarily due to the timing of dry-dock expenses and
certain other expenses.
-- Including fuel, net cruise costs per ALBD increased 12.4 percent (up
8.4 percent on a constant dollar basis) compared to the prior year.
Gross cruise costs per ALBD increased 9.7 percent compared to the prior
year.
-- Fuel price increased 37 percent to $433 per metric ton for Q4 2007
compared to $315 per metric ton in the prior year, and was $9 million
higher than the company's previous guidance of $421 per metric ton.
New Initiatives
During the fourth quarter, the company took delivery of one new ship, the 90,000-ton Queen Victoria marking the first time ever that Cunard has had three Queens in service. Last week, Cunard held a spectacular naming ceremony in Southampton, England to welcome Queen Victoria before setting off on her maiden voyage to Northern Europe. All three Queens will unite for the first and only time in a historic event to take place in New York Harbor on January 13, 2008.
Since the fourth quarter began, the company has ordered six new ships, five for its European brands and one for its North American brands. The company placed orders for two 114,200-ton cruise ships for Costa Cruises to be delivered in 2011 and 2012, and two 71,000-ton cruise ships for its AIDA Cruises brand scheduled to enter service in 2011 and 2012. The company announced the construction of Queen Elizabeth, a 92,000-ton vessel for its Cunard brand to enter service in 2010. It also exercised the option for a 32,000-ton ship for The Yachts of Seabourn to enter service in 2011.
The company also recently announced a significant increase in its presence in Asia. Encouraged by recent favorable trends, Costa will redeploy a second larger vessel to Asia beginning March 2009, more than doubling its capacity in the region.
2008 Outlook
Capacity for 2008 will increase by nine percent, primarily driven by five new ship deliveries to five of the company's brands during the year.
Advance bookings for the first half of 2008 are well ahead of last year in terms of both occupancy and pricing, on a cumulative basis. Advance bookings for the second half of 2008 are also shaping up in a similar fashion to the first half of the year, although it is still early in the booking process.
"Net revenue yields for our North American brands are seeing continued improvement based primarily on stronger pricing in the Caribbean. Our European brands are also performing well absorbing significant new capacity and continuing to benefit from the strong Euro and Sterling," Arison noted.
"While our North American brands will grow capacity at a moderate rate of three percent, our European brands will increase capacity by 22 percent next year, including the full year operation of our new Spanish cruise line, Ibero Cruises. As we grow our European brands, we will be able to achieve economies of scale which will have a favorable impact on our unit costs and profitability," he added.
For the full year 2008, the company expects a 4.5 to 5.5 percent improvement in net revenue yields assuming current Euro and Sterling exchange rates. On a constant dollar basis, net revenue yields are expected to increase 3 to 4 percent. Net cruise costs excluding fuel for the full year 2008 are expected to be flat to down slightly on a constant dollar basis. However, based on the forward curve higher fuel prices for full year 2008 are forecasted to increase fuel expense by $409 million compared to 2007 which will reduce earnings by $0.50 per share. Despite the significant increase in fuel prices the company expects full year 2008 earnings per share to be in the range of $3.10 to $3.30 versus the $2.95 recorded in full year 2007.
First Quarter 2008
For the first quarter of 2008, net revenue yields are expected to increase 6.5 to 7.5 percent (4 to 5 percent on a constant dollar basis) driven by the improvement in Caribbean pricing and the company's high seasonal exposure to Caribbean deployment. Net cruise costs excluding fuel for the first quarter 2008 are expected to increase approximately 2 percent on a constant dollar basis due to the timing of dry-dock and other expenses. Based on the forward curve, higher fuel prices for the first quarter 2008 are expected to increase fuel expense by $146 million compared to 2007 which will reduce earnings by $0.18 per share. As a result, the company expects earnings for the first quarter of 2008 to be in the range of $0.29 to $0.31 per share, down from $0.35 per share in 2007.
Selected Key Forecast Metrics:
------------------------------
Full Year 2008 First Quarter 2008
Current Constant Current Constant
Dollars Dollars Dollars Dollars
Change in:
Net revenue yields 4.5 to 5.5% 3.0 to 4.0% 6.5 to 7.5% 4.0 to 5.0%
Net cruise cost
per ALBD 5.5 to 6.5% 4.0 to 5.0% 12.5 to 13.5% 10.0 to 11.0%
Full Year 2008 First Quarter 2008
Fuel price per metric ton $486 $484
Fuel consumption (metric
tons in thousands) 3,270 798
Currency
Euro $1.44 to 1 euro $1.44 to 1 euro
Sterling $2.02 to 1 pound $2.02 to 1 pound
The company has scheduled a conference call with analysts at 10:00 a.m. EST (15.00 London time) today to discuss its 2007 fourth quarter and full year earnings. This call can be listened to live, and additional information can be obtained, via Carnival Corporation & plc's Web site at www.carnivalcorp.com and www.carnivalplc.com.
Carnival Corporation & plc is the largest cruise vacation group in the world, with a portfolio of cruise brands in North America, Europe and Australia, comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises, The Yachts of Seabourn, AIDA Cruises, Costa Cruises, Cunard Line, Ibero Cruises, Ocean Village, P&O Cruises and P&O Cruises Australia.
Together, these brands operate 85 ships totaling more than 158,000 lower berths with 22 new ships scheduled to enter service between April 2008 and May 2012. Carnival Corporation & plc also operates Holland America Tours and Princess Tours, the leading tour companies in Alaska and the Canadian Yukon. Traded on both the New York and London Stock Exchanges, Carnival Corporation & plc is the only group in the world to be included in both the S&P 500 and the FTSE 100 indices.
Cautionary note concerning factors that may affect future results Some of the statements contained in this earnings release are "forward-looking statements" that involve risks, uncertainties and assumptions with respect to Carnival Corporation & plc, including some statements concerning future results, outlook, plans, goals and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We have tried, whenever possible, to identify these statements by using words like "will," "may," "believe," "expect," "anticipate," "forecast," "future," "intend," "plan," and "estimate" and similar expressions. Because forward-looking statements involve risks and uncertainties, there are many factors that could cause Carnival Corporation & plc's actual results, performance or achievements to differ materially from those expressed or implied in this earnings release. Forward-looking statements include those statements which may impact the forecasting of earnings per share, net revenue yields, booking levels, pricing, occupancy, operating, financing and/or tax costs, fuel costs, costs per available lower berth day, estimates of ship depreciable lives and residual values, outlook or business prospects. These factors include, but are not limited to, the following: general economic and business conditions that may adversely impact the levels of Carnival Corporation & plc's potential vacationers' discretionary income and this group's confidence in the U.S. and other economies and, consequently reduce Carnival Corporation & plc's cruise brands' net revenue yields; the international political climate, armed conflicts, terrorist attacks and threats thereof, availability and pricing of air service and other world events, and their impact on the demand for cruises; conditions in the cruise and land-based vacation industries, including competition from other cruise ship operators and providers of other vacation alternatives and over capacity offered by cruise ship and land-based vacation alternatives; accidents, adverse weather conditions or natural disasters, such as hurricanes and earthquakes and other incidents (including machinery and equipment failures or improper operation thereof) which could cause the alteration of itineraries or cancellation of a cruise or series of cruises, and the impact of the spread of contagious diseases, affecting the health, safety, security and/or vacation satisfaction of passengers; adverse publicity concerning the cruise industry in general, or Carnival Corporation & plc in particular, could impact the demand for Carnival Corporation & plc's cruises; lack of acceptance of new itineraries, products and services by Carnival Corporation & plc's guests; changing consumer preferences, which may, among other things, adversely impact the demand for cruises; the impact of changes in and compliance with laws and regulations relating to environmental, health, safety, security, tax and other regulatory regimes under which Carnival Corporation & plc operate, including the implementation of U.S. regulations requiring U.S. citizens to obtain passports for sea travel to or from additional foreign destinations; the impact of changes in operating and financing costs, including changes in foreign currency exchange rates and interest rates and fuel, food, insurance, payroll and security costs; the ability of Carnival Corporation & plc to implement its shipbuilding programs, including purchasing ships for our North American cruise brands from European shipyards on terms that are favorable or consistent with Carnival Corporation & plc's expectations; Carnival Corporation & plc's ability to implement its brand strategies and to continue to operate and expand its business internationally; Carnival Corporation & plc's future operating cash flow may not be sufficient to fund future obligations and Carnival Corporation & plc may not be able to obtain financing, if necessary, on terms that are favorable or consistent with its expectations; Carnival Corporation & plc's ability to attract and retain qualified shipboard crew and maintain good relations with employee unions; continuing financial viability of Carnival Corporation & plc's travel agent distribution system and air service providers; the impact of Carnival Corporation & plc self-insuring against various risks and its inability to obtain insurance for certain risks at reasonable rates; disruptions and other impairments to Carnival Corporation & plc's information technology networks; lack of continued availability of attractive port destinations; risks associated with the DLC structure, including the uncertainty of its tax status; the impact of pending or threatened litigation; and Carnival Corporation & plc's ability to successfully implement cost reduction plans. Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant listing rules, Carnival Corporation & plc expressly disclaim any obligation to disseminate, after the date of this release, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended, Twelve Months Ended,
November 30, November 30,
------------------- --------------------
2007 2006 2007 2006
------ ------ ------ ------
(in millions, except per share data)
Revenues
Cruise
Passenger tickets $2,355 $2,079 $9,792 $8,903
Onboard and other 726 666 2,846 2,514
Other 43 64 395 422
------ ------ ------ ------
3,124 2,809 13,033 11,839
------ ------ ------ ------
Costs and Expenses
Operating
Cruise Commissions,
transportation and
other 448 398 1,941 1,749
Onboard and other 129 127 495 453
Payroll and related 360 304 1,336 (1) 1,158
Fuel 334 228 1,096 935
Food 191 165 747 644
Other ship operating 488 403 1,717 1,538
Other 35 55 296 314
------ ------ ------ ------
Total 1,985 1,680 7,628 6,791
Selling and
administrative 426 392 1,579 1,447
Depreciation and
amortization 290 261 1,101 988
------ ------ ------ ------
2,701 2,333 10,308 9,226
------ ------ ------ ------
Operating Income 423 476 2,725 2,613
------ ------ ------ ------
Nonoperating (Expense) Income
Interest income 20 8 67 25
Interest expense, net of
capitalized interest (94) (80) (367) (312)
Other (expense) income, net (1) 9 (1) (8)
------ ------ ------ ------
(75) (63) (301) (295)
------ ------ ------ ------
Income Before Income Taxes 348 413 2,424 2,318
Income Tax Benefit
(Expense), Net 10 3 (16) (39)
------ ------ ------ ------
Net Income $358 $416 $2,408 $2,279
====== ====== ====== ======
Earnings Per Share
Basic $0.45 $0.53 $3.04 $2.85
====== ====== ====== ======
Diluted $0.44 $0.51 $2.95 $2.77
====== ====== ====== ======
Dividends Per Share $0.40 $0.275 $1.375 $1.025
====== ====== ====== ======
Weighted-Average Shares
Outstanding - Basic 790 793 793 801
====== ====== ====== ======
Weighted-Average Shares
Outstanding - Diluted 825 828 828 836
====== ====== ====== ======
(1) Includes a $20 million expense related to the British Merchant Navy
Officers Pension Fund contribution.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
November 30,
-----------------------
2007 2006
-------- --------
(in millions, except par values)
ASSETS
Current Assets
Cash and cash equivalents $943 $1,163
Trade and other receivables, net 436 280
Inventories 331 263
Prepaid expenses and other 266 289
-------- --------
Total current assets 1,976 1,995
-------- --------
Property and Equipment, Net 26,639 23,458
Goodwill 3,610 3,313
Trademarks 1,393 1,321
Other Assets 563 465
-------- --------
$34,181 $30,552
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $115 $438
Current portion of long-term debt 1,028 1,054
Convertible debt subject to current put
options 1,396
Accounts payable 561 438
Accrued liabilities and other 1,353 1,149
Customer deposits 2,807 2,336
-------- --------
Total current liabilities 7,260 5,415
------- -------
Long-Term Debt 6,313 6,355
Other Long-Term Liabilities and
Deferred Income 645 572
Shareholders' Equity
Common stock of Carnival Corporation;
$0.01 par value; 1,960 shares authorized;
643 shares at 2007 and 641 shares at 2006
issued 6 6
Ordinary shares of Carnival plc;
$1.66 par value; 226 shares authorized;
213 shares at 2007 and 2006 issued 354 354
Additional paid-in capital 7,599 7,479
Retained earnings 12,921 11,600
Accumulated other comprehensive income 1,296 661
Treasury stock; 19 shares at 2007 and
18 shares at 2006 of Carnival Corporation
and 50 shares at 2007 and 42 shares at
2006 of Carnival plc, at cost (2,213) (1,890)
-------- --------
Total shareholders' equity 19,963 18,210
-------- --------
$34,181 $30,552
======== ========
CARNIVAL CORPORATION & PLC
SELECTED INFORMATION
Three Months Ended, Twelve Months Ended,
November 30, November 30,
------------------- --------------------
2007 2006 2007 2006
------ ------ ------ ------
(in millions, except statistical information)
STATISTICAL INFORMATION
Passengers carried
(in thousands) 1,888 1,748 7,672 7,008 (1)
Occupancy percentage 103.2% 103.4% 105.6% 106.0% (2)
Fuel cost per metric ton (3) $433 $315 $361 $334
CASH FLOW INFORMATION
Cash from operations $857 $805 $4,069 $3,633
Capital expenditures $936 $298 $3,312 $2,480
Dividends paid $277 $198 $ 990 $803
SEGMENT INFORMATION
Revenues
Cruise $3,081 $2,745 $12,638 $11,417
Other 85 83 553 533
Intersegment elimination (42) (19) (158) (111)
------ ------ ------ ------
$3,124 $2,809 $13,033 $11,839
====== ====== ====== ======
Operating expenses
Cruise $1,950 $1,625 $7,332 $6,477
Other 77 74 454 425
Intersegment elimination (42) (19) (158) (111)
------ ------ ------ ------
$1,985 $1,680 $7,628 $6,791
====== ====== ====== ======
Selling and administrative
expenses
Cruise $418 $383 $1,547 $1,405
Other 8 9 32 42
------ ------ ------ ------
$426 $392 $1,579 $1,447
====== ====== ====== ======
Depreciation and
amortization
Cruise $280 $252 $1,065 $954
Other 10 9 36 34
------ ------ ------ ------
$290 $261 $1,101 $988
====== ====== ====== ======
Operating income (loss)
Cruise $433 $485 $2,694 $2,581
Other (10) (9) 31 32
------ ------ ------ ------
$423 $476 $2,725 $2,613
====== ====== ====== ======
(1) Passengers carried in first quarter of 2006 does not include any
passengers for the three ships chartered to the Military Sealift
Command in connection with the Hurricane Katrina relief efforts.
(2) Occupancy percentage in first quarter of 2006 includes the three
ships chartered to the Military Sealift Command at 100% occupancy.
(3) Fuel cost per metric ton is calculated by dividing the cost of our
fuel by the number of metric tons consumed.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
Gross and net revenue yields were computed by dividing the gross or net revenues, without rounding, by ALBDs as follows:
Three Months Ended, Twelve Months Ended,
November 30, November 30,
------------------- --------------------
2007 2006 2007 2006
------ ------ ------ ------
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $2,355 $2,079 $9,792 $8,903
Onboard and other 726 666 2,846 2,514
---------- ---------- ---------- ----------
Gross cruise revenues 3,081 2,745 12,638 11,417
Less cruise costs
Commissions, transportation
and other (448) (398) (1,941) (1,749)
Onboard and other (129) (127) (495) (453)
---------- ---------- ---------- ----------
Net cruise revenues (1) $2,504 $2,220 $10,202 $9,215
========== ========== ========== ==========
ALBDs (2) 13,794,846 12,828,609 54,132,927 49,945,184
========== ========== ========== ==========
Gross revenue yields (1) $223.42 $213.96 $233.47 $228.58
========== ========== ========== ==========
Net revenue yields (1) $181.61 $173.09 $188.48 $184.50
========== ========== ========== ==========
Gross and net cruise costs per ALBD were computed by dividing the gross or net cruise costs, without rounding, by ALBDs as follows:
Three Months Ended, Twelve Months Ended,
November 30, November 30,
------------------- --------------------
2007 2006 2007 2006
------ ------ ------ ------
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $1,950 $1,625 $7,332 $6,477
Cruise selling and
administrative expenses 418 383 1,547 1,405
---------- ---------- ---------- ----------
Gross cruise costs 2,368 2,008 8,879 7,882
Less cruise costs included
in net cruise revenues
Commissions,
transportation and other (448) (398) (1,941) (1,749)
Onboard and other (129) (127) (495) (453)
---------- ---------- ---------- ----------
Net cruise costs (1) $1,791 $1,483 $6,443 $5,680
========== ========== ========== ==========
ALBDs (2) 13,794,846 12,828,609 54,132,927 49,945,184
========== ========== ========== ==========
Gross cruise costs
per ALBD (1) $171.69 $156.44 $164.02 $157.81
========== ========== ========== ==========
Net cruise costs
per ALBD (1) $129.88 $115.57 $119.03 $113.73
========== ========== ========== ==========
NOTES TO NON-GAAP FINANCIAL MEASURES
(1) We use net cruise revenues per ALBD ("net revenue yields") and net
cruise costs per ALBD as significant non-GAAP financial measures of
our cruise segment financial performance. We believe that net revenue
yields are commonly used in the cruise industry to measure a company's
cruise segment revenue performance. This measure is also used for
revenue management purposes. In calculating net revenue yields, we
use "net cruise revenues" rather than "gross cruise revenues." We
believe that net cruise revenues is a more meaningful measure in
determining revenue yield than gross cruise revenues because it
reflects the cruise revenues earned by us net of our most significant
variable costs, which are travel agent commissions, cost of air
transportation and certain other variable direct costs associated with
onboard and other revenues. Substantially all of our remaining cruise
costs are largely fixed once our ship capacity levels have been
determined, except for the impact of changing prices.
Net cruise costs per ALBD is the most significant measure we use to
monitor our ability to control our cruise segment costs rather than
gross cruise costs per ALBD. In calculating net cruise costs, we
exclude the same variable costs that are included in the calculation
of net cruise revenues. This is done to avoid duplicating these
variable costs in these two non-GAAP financial measures.
We have not provided estimates of future gross revenue yields or
future gross cruise costs per ALBD because the reconciliations of
forecasted net cruise revenues to forecasted gross cruise revenues or
forecasted net cruise costs to forecasted cruise operating expenses
would require us to forecast, with reasonable accuracy, the amount of
air and other transportation costs that our forecasted cruise
passengers would elect to purchase from us (the "air/sea mix"). Since
the forecasting of future air/sea mix involves several significant
variables that are relatively difficult to forecast and the revenues
from the sale of air and other transportation approximate the costs of
providing that transportation, management focuses primarily on
forecasts of net cruise revenues and costs rather than gross cruise
revenues and costs. This does not impact, in any material respect,
our ability to forecast our future results, as any variation in the
air/sea mix has no material impact on our forecasted net cruise
revenues or forecasted net cruise costs. As such, management does not
believe that this reconciling information would be meaningful.
In addition, because a significant portion of Carnival Corporation &
plc's operations utilize the Euro or Sterling to measure their results
and financial condition, the translation of those operations to our
U.S. dollar reporting currency results in increases in reported U.S.
dollar revenues and expenses if the U.S. dollar weakens against these
foreign currencies, and decreases in reported U.S. dollar revenues and
expenses if the U.S. dollar strengthens against these foreign
currencies. Accordingly, we also monitor these two non-GAAP financial
measures assuming the current period currency exchange rates have
remained constant with the prior year's comparable period rates, or on
a "constant dollar basis," in order to remove the impact of changes in
exchange rates on our non-U.S. dollar cruise operations. We believe
that this is a useful measure indicating the actual growth of our
operations in a fluctuating currency exchange rate environment. On a
constant dollar basis, net cruise revenues and net cruise costs would
be $2.41 billion and $1.73 billion for the three months ended November
30, 2007 and $9.92 billion and $6.26 billion for the twelve months
ended November 30, 2007, respectively. On a constant dollar basis,
gross cruise revenues and gross cruise costs would be $2.97 billion
and $2.28 billion for the three months ended November 30, 2007 and
$12.27 billion and $8.62 billion for the twelve months ended November
30, 2007, respectively. In addition, our non-U.S. dollar cruise
operations' depreciation and net interest expense were impacted by the
changes in exchange rates for the three and twelve months ended
November 30, 2007, compared to the prior year's comparable periods.
(2) Available lower berth days ("ALBDs") is a standard measure of
passenger capacity for the period. It assumes that each cabin we
offer for sale accommodates two passengers. ALBDs are computed by
multiplying passenger capacity by revenue-producing ship operating
days in the period.
SOURCE Carnival Corporation
CONTACT:
Media, US, Tim Gallagher of Carnival Corporation & plc, +1-305-599-2600, ext. 16000;
or UK, Sophie Fitton or Sophie Brand, both of Brunswick Group, +44 (0) 20-7404-5959;
or Investor Relations, US and UK, Beth Roberts of Carnival Corporation & plc, +1-305-406-4832/
Web site: http://www.carnivalcorp.com
http://www.carnivalplc.com M
(CCL CUK)
