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Carnival shares edge lower despite robust interims

Shares in Carnival Corporation, the US constituent of the Anglo-American Carnival Corp & plc group, have failed to rally at the US market open despite unaudited quarterly earnings coming in significantly above expectations.

It posted an EPS of 25c a share compared  to the average market forecast of about $0.16c.

“The problem is that CCL (Carnival Corp & plc) also posted a raft of guidance for full-year 2015, including Q3 2015 non-GAAP EPS of $1.56-$1.60, and FY non-GAAP EPS of $2.35 to $2.50, that looks somewhat off course, compared to consensus,"  said Ken Odeluga, a senior market analyst at Cityindex in London.

Shares in Carnival Corporation fell 0.9% to trade at $49.46 on the New York Stock Exchange on Tuesday morning local time, while Carnival plc, the UK based and London listed holding company, lost 0.2% to £32.80 by late afternoon local time.

Carnival seen to perform better in 2016 than this year

The statement from Carnival has a very strong bullish tone, and there’s little doubt its earnings will get a further lift in the current year, after net income advanced about 12% in FY2014, said Ken Odeluga, a senior market analyst at Cityindex in London.

“But a lift is all the market expects, with profits looking set to rise by a modest 2.5%, or perhaps even less now, given the measured guidance in today’s report,” he said in a reaction to Carnival group’s second quarter interim results released earlier today.

“There’s a clue in one of Carnival’s most assertive statements in the report, that it’s "stepping up…marketing investment for the remainder of the year to further solidify our base of business for 2016".

"2015 won’t entirely be a write-off in earnings terms, but the tough comparable earnings of the year before have presented a high hurdle amid low margin for error year-to-year, and it makes sense to expect growth in 2016 to look better than that expected for 2015,” he concluded.

“Ironically, the crude oil related-benefits which bolstered the cruise line’s earnings in the second half of 2014, are part of the reason why earnings for the current year are going to be softer,” he said

“CCL(Carnival Corp & plc)  got caught on the wrong side of a fuel hedging deal which will cost 6c a share in Q3; at the same time, for now, full-year 2015 net cruise costs excluding fuel are forecast to rise circa 3% says Carnival Corp. Unfortunate, considering CCL said fuel prices it paid “fell 37%” for Q2 2015 vs. Q2 2014,” Odeluga said

Stepped-up “marketing investment” for the remainder of the year, and quarterly net cruise costs, excluding fuel having already risen 6.1% (under an artificially flat currency effects) are further incrementally negative news, which a forecast net revenue yield rise of 3%-4% (again, in flat FX terms) can only vaguely be expected to offset.

Carnival 2015 EPS forecast at $2.35 to $2.50 virtually unchanged

Carnival Corporation & plc, the Anglo American cruise shipping giant, says it forecasts its full year 2015 non- GAAP diluted earnings per share guidance to be in the range of $2.35 to $2.50.

In its first quarter interim result release on 27 March, the company forecast full year 2015 non- GAAP diluted earnings per share to be in the range of $2.30 to $2.50, compared to 2014 non- GAAP diluted earnings of $1.93 per share.

During the last thirteen weeks, fleetwide booking volumes for the next three quarters were running well ahead of last year at slightly lower prices due to transactional currency impacts, the company said in its second quarter earnings release.

At this time, cumulative advance bookings for the next three quarters are well ahead of the prior year at slightly lower prices again due to transactional currency impacts.

President and CEO Arnold Donald noted: “Current strength in booking volumes clearly demonstrates strong consumer demand for our brands, leaving less inventory remaining for sale and building confidence in achieving significant revenue yield improvement this year.”

“We are stepping up our marketing investment for the remainder of the year to further solidify our base of business for 2016 and drive continued yield improvement as we progress on our path toward double digit return on invested capital.”

The company continues to expect full year 2015 net revenue yields on a constant currency basis to be up 3% to 4%, which excludes translational and transactional currency impacts, compared to the prior year (up 2% to 3% on a constant dollar basis compared to the prior year).

The company now expects full year 2015 net cruise costs excluding fuel per ALBD to be up approximately 3% compared to the prior year on a constant dollar basis, which is slightly higher than had been anticipated in the March guidance mainly due to increased investment in advertising.

Carnival group revenue yield rose 5% in second quarter on tickets, on board spending

Carnival Corporation & plc, the Anglo-American cruise shipping group, has reported a 5% revenue yield rise in the second quarter of its financial year on strong ticket pricing and on board revenues,  President and CEO Arnold Donald said.

 “Our initiatives to create demand and leverage our scale benefited both cruise ticket prices and onboard revenues contributing to 5% revenue yield improvement (constant currency) this quarter,” Donald said in a statement.

“While all of our North American brands enjoyed strong revenue yield improvement, our Carnival Cruise Line brand performed particularly well again this quarter,” he said.

Significant milestones during the second quarter included the launch of “fathom”, the tenth brand in the Carnival Corporation & plc family. Beginning in April 2016, “fathom” will introduce a new cruise category offering travelers authentic and meaningful experiences to targeted destinations, beginning with the Dominican Republic, to work alongside locals for transformational community impact.

Additionally, Costa began year-round service from Shanghai on Costa Serena in April and announced the deployment of Costa Fortuna to China in 2016 bringing the total to four Costa ships dedicated to Chinese guests.

Princess Cruises also announced that it will expand its presence in Asia with a new ship scheduled to enter service in mid-2017 to be based in China year-round and custom- designed specifically for Chinese guests.

Already the industry leader in passenger cruise days home ported in China, these developments will further the company’s leading presence in this rapidly expanding market and attract new cruisers to the company’s brands.

Carnival Corp & plc more than doubles second quarter net profit

Carnival Corporation & plc, the world’s large cruise shipping company, has reported a rise in net profit for the second quarter of its financial year to $222 million from $98 million in the same period last year. Revenues fell to $3.59 billion from $3.63 billion.

For the first six months of the current financial year, the net profit reached $271 million, up from $78 million in the same period a year earlier. Revenues declined to $7.12 billion from $7.22 billion.

Non-GAAP earnings per share came to $0.25 for the latest quarter, ip from $0.09 a year earlier, and also exceeded analysts abverage forecast of $0.16.

2Q Highlights

              2Q net revenue yields (net revenue per available lower berth day or “ALBD”) in constant dollars increased 4.1% compared to the prior year, which was better than the company’s guidance of up 2 to 3 percent

              2Q net cruise costs excluding fuel per ALBD in constant dollars increased 6.1% compared to the prior year primarily due to an increase in dry dock days and were better than March guidance, up 6.5 to 7.5% due to the timing of expenses between quarters

              2Q non-GAAP earnings per share (diluted) of $0.25, compared to $0.09 for the prior year Outlook

              At this time, cumulative advance bookings for the next three quarters are well ahead of the prior year at slightly lower prices due to transactional currency impacts

              FY 2015 net revenue yields on a constant currency basis are expected to be up 3 to 4% compared to the prior year (up 2 to 3 % in constant dollars)

              FY 2015 net cruise costs excluding fuel per ALBD in constant dollars are expected to be up approximately 3% compared to the prior year

              FY 2015 non-GAAP earnings per share (diluted) expected to be in the range of $2.35 to $2.50, compared to $1.93 for 2014

              3Q 2015 non-GAAP earnings per share (diluted) expected to be in the range of $1.56 to $1.60, compared to $1.58 for 3Q 2014