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Carnival Corporation & plc reports third quarter earnings

Carnival Corporation & plc announced non-GAAP net income of $1.2 billion, or $1.58 diluted EPS for the third quarter of 2014 compared to non-GAAP net income for the third quarter of 2013 of $1.1 billion, or $1.38 diluted EPS. For the third quarter of 2014, U.S. GAAP net income, which included net unrealized gains on fuel derivatives of $15 million, was $1.2 billion, or $1.60 diluted EPS. For the third quarter of 2013, U.S. GAAP net income, which included impairments net of unrealized gains on fuel derivatives of $139 million, was $934 million, or $1.20 diluted EPS. Revenues for the third quarter of 2014 were $4.9 billion, compared with $4.7 billion the prior year.

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted, “Strong close-in demand and higher onboard spending helped drive significantly better than expected third quarter results and 15 percent year-over-year earnings improvement. Our Asia operations performed particularly well during the quarter, driven by a double-digit yield increase in our China program, further solidifying our industry leading presence in this important emerging cruise market.  Our continental European operations also enjoyed strong yield and profit improvement in the quarter, reflecting continued progress for the Costa brand. In addition, our summer Caribbean product successfully attracted nearly 20 percent more guests than the prior year, reinforcing the popularity of the world’s largest cruising region,” Donald added.  

Key metrics for the third quarter 2014 compared to the prior year were as follows:
•    On a constant dollar basis, net revenue yields (net revenue per available lower berth day or “ALBD”) increased 1.8 percent for 3Q 2014, better than June guidance of flat to down 1 percent. Gross revenue yields increased 2.5 percent in current dollars.
•    Net cruise costs excluding fuel per ALBD increased 0.5 percent in constant dollars,  better than June guidance of up 1 to 2 percent due to the timing of certain expenses. Gross cruise costs including fuel per ALBD in current dollars decreased 5.8 percent.
•    Fuel prices declined 3.5 percent to $650 per metric ton for 3Q 2014 from $674 per metric ton in 3Q 2013 and were less than June guidance of $673 per metric ton.
•    Fuel consumption per ALBD decreased over 3 percent in 3Q 2014 compared to the prior year.

During the third quarter, YouGov’s BrandIndex ranked Carnival Cruise Lines the most-improved U.S. brand in consumer perception in its mid-year 2014 Buzz Rankings Report.  A number of initiatives introduced by Carnival Cruise Lines, such as the Great Vacation Guarantee, Carnival LIVE Concert Series, Camp Ocean and Seuss at Sea, appear to be resonating with consumers. In addition, Princess Cruises recently announced an agreement with Italian shipbuilder Fincantieri to construct a new 3,600-berth vessel, which will enter service in 2017 based on the highly popular design platform introduced by sister ships Royal Princess and Regal Princess.  In keeping with the company’s strategy for measured capacity growth, this is the only newbuild scheduled to be delivered in 2017.

In June, Seabourn signed a multi-year agreement with UNESCO (United Nations Educational Scientific and Cultural Organization) to support the organization’s mission of safeguarding unique cultural and natural features around the world.  That announcement came on the heels of a five year agreement to support The Nature Conservancy’s global marine protection priorities.  These programs, combined with the company’s commitment to install exhaust gas cleaning technology on more than 70 ships, are among many initiatives underway to support the preservation of marine, environmental and cultural resources around the globe.

Outlook 

Based on the strength of third quarter net revenue yields and current booking trends, the company has increased its expectations for full year 2014 net revenue yields on a constant dollar basis to be in line with the prior year, from its previous guidance of down slightly.  Excluding fuel, the company expects full year net cruise costs per ALBD to be slightly higher compared to the prior year on a constant dollar basis. Taking the above factors into consideration, the company has increased its forecast for full year 2014 non-GAAP diluted earnings per share to be in the range of $1.84 to $1.88, better than both June guidance of $1.60 to $1.75 and 2013 non-GAAP diluted earnings per share of $1.58.
At this time, cumulative advance bookings for the first half of 2015 are ahead of the prior year at higher prices. Over the last quarter, fleetwide booking volumes for the first half of 2015 have been running ahead of the prior year at higher prices.

“The sustained improvement in booking trends as we have progressed through the year combined with yield increases in the second half of 2014 builds confidence that we will see continued yield growth in 2015 and beyond,” said Donald.  He also noted that new product initiatives and innovative marketing campaigns implemented across the brands over the past year are driving the improvement in consumer demand and pricing trends.

For fiscal 2015, net cruise costs excluding fuel per ALBD are expected to increase approximately three percent due primarily to a significantly higher level of dry-dock days scheduled next year to install new air emissions technology as well as other  technology designed to improve fuel efficiency.  The company expects the exhaust gas cleaning system or scrubber technology will be installed on approximately 70 percent of its fleet by 2016, thus enabling the company to meet the 2015 stricter air emissions standards as well as mitigate escalating fuel costs that will result from the new requirements.  The company anticipates the new regulations will result in higher fuel costs in 2015 of approximately $0.10 per share with that increase expected to be reduced by half in 2016 and mostly offset in 2017 based on the system roll-out.  Also, in 2016, the company will revert back to a more normalized dry-dock schedule, which will offset approximately half of the increase in 2015 net cruise costs excluding fuel.

“Our implementation of the air emissions technology is a sound investment in our company’s future and more importantly it will benefit the environment for years to come,” said Donald. “These technology investments are laying a solid foundation towards sustainable earnings improvement. Combined with our other strategic initiatives designed to foster revenue growth and contain costs, we are gaining momentum towards our goal of achieving double digit returns on investment over time,” Donald added.

Fourth Quarter 2014 Outlook

Fourth quarter constant dollar net revenue yields are expected to be up 1.5 to 2.5 percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the fourth quarter are expected to be lower by 1.0 to 2.0 percent on a constant dollar basis compared to the prior year.

Based on the above factors, the company expects non-GAAP diluted earnings for the fourth quarter 2014 to be in the range of $0.15 to $0.19 per share versus 2013 non-GAAP earnings of $0.04 per share.

MedCruise elects Carla Salvadό as new President

The 45th MedCruise General Assembly that was held in Barcelona, Spain elected Mrs Carla Salvadό, Marketing and Cruise Manager of the Port of Barcelona as the new President of the association representing cruise ports in the Med and its adjoining seas.

Carla Salvadό started working at the Port of Barcelona in 1992, and first involved in the cruise industry in 2003. She has worked for 3 years as Secretary General of MedCruise, and served its BoD in subsequent years. She is now the Marketing and Cruise Manager of the Port of Barcelona. She has studied Economics and Business Management at the Pompeu Fabra University and ESADE Business School.

She succeeds in the Presidency Stavros Hatzakos, General Manager of the Port of Piraeus. Hatzakos will continue serving the Association as Honorary President.

"I am very confident that the Association will continue to effectively represent all cruise ports in the Med and its adjoining seas. MedCruise is a unique association that unites and represents cruise ports that host over 20% of the global cruise traffic. I would like thank MedCruise members that trust me to lead the Association, and I am looking forward to work with all our members, in order to promote the cruise activities in each of them" said C. Salvadό following the announcement of the results.

Salvadό continued stating "Other cruise ports and cruise lines association are partners in these efforts, and along with the new Board of Directors I will work on maintaining a close relationship with all of them for increasing the prospects of cruising in the Med and beyond".
 
Along with its President, MedCruise elected its Board of Directors (BoD) members to serve for the period 2014-17.

The members of the new Board of Directors are Kristijan Pavic (Dubrovnik, Croatia, Senior Vice President), Maria Cano (Palamόs, Spain, Vice President), Figen Ayan (Istanbul, Turkey), Andreia Fernandes Ventura (Lisbon, Portugal), Anne-Sophie Peyran (French Riviera Ports, France), Airam Díaz Pastor (Tenerife Ports, Spain), Lotfi El Ajmi (Tunisian Ports, Tunisia), Elvira  Leschinskaya (Odessa, Ukraine),  Boyan Babic (Koper, Slovenia),  Giampiero  Costagli (Portoferraio, Italy), Marijan  Petkovic (Sibenik, Croatia), and Vlado  Mezak (Rijeka, Croatia).
 
During its meeting that took place immediately after the announcement of the election results, the new Board of Directors decided that the MedCruise Secretariat will continue to perform its tasks, from the Greek office of the Association at the Port of Piraeus, and reappointed Thanos Pallis as the Secretary General of the Association.
 
The 45th MedCruise General Assembly also welcomed two new members, Portofino, and Gioia Tauro, both from Italy, rising port membership to 73.
 
The 46th MedCruise General Assembly will take place in Zadar, Croatia, 3-6 June 2015.

Cruising injected $44 billion in US economy 2013 – study

An independent report commissioned by CLIA from Business Research and Economic Advisers (BREA), The Contribution of the North American Cruise Industry to the U.S. Economy in 2013, has found that total contributions of the cruise industry to the U.S. economy reached a record $44.1 billion last yrear.

“The cruise industry supported 363,133 U.S. jobs, in every state, paying wages of $18.3 billion. Nearly 10 million cruise passengers embarked at U.S. ports, representing 57% of the North American cruise industry’s global embarkations,” the report said. U.S.-based direct spending by cruise lines, passengers, and crew totaled $20.1 billion, nearly double expenditures made in 2000. Nearly 70% of the cruise industry’s non-wage expenditures were made with U.S.-based businesses

The BREA study found that the positive impacts of the cruise industry are found in every state, ranging from 3,227 jobs and $138 million in direct purchases in Missouri, to more than 140,400 jobs and over $7.3 billion in direct purchases in Florida.

The top 10 U.S. cruise ports accounted for 86 percent of embarkations. Florida remains the center of cruising in the United States, with its five cruise ports accounting for nearly 62 percent of all U.S. embarkations in 2013. California, Texas, and New York each had more than 600,000 embarkations.

Meyer Werft’s Turku acquisition and TUI Cruises’ two orders confirmed

Mein Schiff 4 1000px

 

Photo credit: Jouni Saaristo

Finnish government and the German shipbuilder Meyer Werft have finalised the purchase of the whole share capital of STX Finland Oy from STX Europe Ltd. Meyer Werft and the State of Finland had published the signing of the acquisition agreement on August 4, 2014. Now the remaining open conditions for the acquisition have been fulfilled: The German antitrust authority approved the corporate acquisition after completing a merger control review. Final decisions regarding construction financing with the commercial banks have also been obtained.

The new name of the company is Meyer Turku Oy.

Meanwhile, the order of German TUI Cruises of two new cruise ships from Meyer Turku has become effective. The ordered ships are sister ships for Mein Schiff 3, which was delivered from the Turku Shipyard in May 2014, and Mein Schiff 4, which will be delivered to TUI Cruises in May 2015. The order of these two new ships is expected to create a direct employment effect of at least 10,000 man years. The ships will be delivered in 2016 and 2017. Furthermore, Meyer Turku and TUI Cruises agreed on two options, with deliveries in 2018 and 2019.

Meyer Werft took up 70 percent of the shares and will carry the main responsibility for the yard’s operations and its further development. The State of Finland purchased 30 percent of the share capital through the Finnish Industry Investment Ltd, a fully government-owned investment company. The investors have injected new equity into the new company, which will constitute a solid basis for further development. 

Cruise industry worldwide expenditures $117 billion in 2013 - CLIA

Cruise industry expenditures generated $117 billion in total output worldwide in 2013, requiring 891,009 full-time equivalent employees who earned $38.47 billion in income, Cruise Lines International Association(CLIA) said in a statement. Christine Duffy, CLIA presideng and ceo, noted in the statement that on a global basis, over the ten years from 2003 to 2013, demand for cruising worldwide has increased 77% from 12 million to 21.3 million passengers.