Tuesday, June 20, 2000


Carnival reports "constrained" earnings

Carnival Corporation reported net income of $204.0 million ($0.34 Diluted EPS) on revenues of $875.1 million for its second quarter ended May 31, 2000, compared to net income of $203.3 million ($0.33 Diluted EPS) on revenues of $796.1 million for the same quarter in 1999. Second quarter 2000 benefited from non-recurring net gains of $10.7 million from the company's affiliated operations.

Net income for the six months ended May 31, 2000 was $375.5 million ($0.61 Diluted EPS) on revenues of $1.70 billion, compared to net income of $361.1 million ($0.59 Diluted EPS) on revenues of $1.54 billion for the same period in 1999.

Commenting on the second quarter results, chairman and CEO Micky Arison stated that earnings were constrained by a combination of lower net revenue yields and significantly higher fuel costs.

"Although there was some pressure on cruise pricing, we continued to attract a record number of first-time cruisers and grew the number of passengers carried by more than 100,000 -- the largest quarterly increase in passenger counts in recent history. This resulted in occupancy levels increasing by 2.4 percent to 102.3 percent during the second quarter," Arison noted.

Looking to the remainder of the fiscal year, the company expects that net revenue yields for the second half of 2000 will be somewhat less than last year and that earnings per share for the full year will be slightly higher than last year.

Because existing cruise pricing is providing unprecedented value to the vacationing public, the company attracted a record number of first-time cruisers during the first half of 2000. The company believes that this broadening of its customer base better positions it to grow its earnings in the future. Arison also pointed out that the industry should benefit from favorable demographic trends in the coming years as more people move into the 40 to 60 age range, a prime age group for cruising. "A larger audience of first-time cruisers, combined with a growing number of repeat passengers brought about by strong levels of customer satisfaction, should produce a large number of guests to fill our new order book of 15 ships scheduled for delivery over the next five years," he said. Arison added that the company remains confident of its ability to expand the cruise market during this period and to create greater value for its shareholders.

In February 2000, Carnival's board of directors authorized the repurchase of up to $1 billion of its common stock. Since then, the company has repurchased 14.3 million shares of its common stock at a cost of approximately $340 million.


U.K. MoD orders survey vessels
The U.K. Ministry of Defence has placed a £130 million (approx. $220 million) prime contract for the design and build of two new specialist warships, known as Multi-Role Hydrographic and Oceanographic Survey Vessels, with Vosper Thornycroft (UK) Ltd.

The ships, to be named HMS ECHO and HMS ENTERPRISE will be built under sub-contract at Appledore Shipbuilders in Appledore, Devon and are due to enter service in 2002 and 2003.

Construction work is expected to sustain about 800 jobs in the shipyard and its local suppliers over the next three years."

The contract also covers the support of the ships throughout their 25 year service life with the Royal Navy.

The 3,500 tonne ships will be equipped with the latest survey systems, including multi-beam echo sounders and modern side sonars, as well as advanced navigation and communication systems. Each of the ships will be available for operations for over 330 days each year - a 50 percent improvement on older existing vessels. Considerably improved stability at sea means they will be able to carry out survey work for 90 percent of the year in seas much rougher than before.

As well as undertaking specialist surveying tasks, the ships will work in world-wide front-line operational roles, including supporting mine warfare and amphibious operations necessary to the long-term effectiveness of the Royal Navy.

The project is being managed by the Survey Vessels Integrated Project Team, based at the U.K. Defence Procurement Agency Headquarters at Abbey Wood, Bristol. The team is lead by Ian Wakeling.


Wärtsilä NSD signs agreement with John Crane-Lips
Wärtsilä NSD, and TI Group, on behalf of John Crane-Lips, have now signed a cooperation agreement to develop, market and supply total marine propulsion power systems to the shipbuilding industry.The cooperation agreement follows the signing of a letter of intent in February and is subject to clearance by the appropriate regulatory authorities.

Agreement has also been reached for TI Group to purchase Wärtsilä NSD's propeller production and related servicing business at Rubbestadneset, Norway, with approximately 120 employees transferring from Wärtsilä NSD Norway to John Crane-Lips.

Under the cooperation agreement, Wärtsilä NSD, with 560 marine support people worldwide, will act as prime contractor to shipyards for total marine propulsion power systems. It will provide diesel engine based prime movers and gearboxes while John Crane-Lips will supply on-board propulsion and sealing systems. The co-operation agreement tragets the entire
commercial marine market, from fishing vessels and tug boats to cruise ships and VLCCs, as well as defense markets

Both Wärtsilä NSD and John Crane-Lips retain the right to market their own product ranges independently where customers to not wish to purchase total marine power systems.


GE Marine Engines to upgrade gear plant
GE Marine Engines says that, over the next year, it will invest in substantial upgrades to grinding, inspection and hobbing equipment used at its Lynn, Mass. Gear plant . The first production pieces to be produced with this new equipment will be high speed pinions and gears for the U.S. Navy's current DDG destroyer program.

"We' ve taken a 20-year step forward with this large investment in new equipment, which translates into long-term value such as greater grinding accuracy and gear reliability," said Bill Gehr, Manager Gear Programs for GE Marine Engines. He added that GE will be able to produce quiet, more reliable gearing with enhanced load capacity by holding tooth tolerances within .00005 inches --about 1/60th the size of a human hair.

The new 1.6-meter CNC form grinding equipment replaces the grinding equipment GE installed in the 1980s. This high precision (DIN 1) machine will enable the use of a CBN cutting wheel technology to profile grind marine gearing. To augment the grinder, a CNC gear inspection machine has been installed adjacent to the grinder in the same climate controlled facility. Together, these machine tools will manufacture and assure the highest quality gearing for the U.S. Navy and other marine applications.

Plans are underway for GE to continue investing in its Lynn Gear plant. By the end of 2000, GE expects to install a CNC 1.6-meter hobber and by mid-2001 will install a 4.0-meter profile grinder.


Plans to expand Panama Canal
Next Monday, members of the Panama Canal Advisory Committee will reportedly hear details of a $5.9 billion plan to build two new locks over the next eight years, at the Atlantic and Pacific entrances of the canal, and to widen the channel by 2030.

The expansion, which has yet to be approved, would allow the transit of post-Panamax-size vessels and would increase ship traffic by 36% to 51 ships per day by 2020 and another 31% to an average of 67.2 ships per day by 2060, compared with 37.3 transits today.

The estimated total cost is much less than earlier studies which, in 1993, put the construction cost of new locks and modernization program at up to $10 billion.

Financing for the expansion project would likely come from a mix of self-financing, increased Canal tolls and revenues and international bond placements.


 

Technigaz wins Spanish LNG import terminal contract
SN Technigaz, a wholly-owned subsidiary of Bouygues Offshore has won a contract from Bahia de Bizkaia Gas (BBG) for construction of a Liquefied Natural Gas (LNG) import and regasification terminal in the newly extended harbor of Bilbao. BBG is a Spanish gas marketing company owned equally by BP Amoco, Repsol, Iberdrola and Ente Vasco de la Energia.

The contract totals 203 million euros (about $180 million) and SN Technigaz's portion is 81 million euros. It will be performed through a joint venture between SN Technigaz (leader with 40%), Initec (33%) and Sofregaz (27%). This turnkey contract includes the design, engineering, procurement, supervision and construction of the plant, including commissioning and start-up of the installations, as well as training of operating and maintenance personnel.

The LNG terminal will consist of a jetty with the capacity to receive methane carriers of 135,000 cubic meters, two storage tanks with a capacity of 150,000 cubic meters each and a regasification plant able to generate 2.7 billion cubic meters of natural gas per annum.

 

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