June 17 2004

Record quarter for Carnival

"This has been a remarkable quarter," said Micky Arison, Carnival Corporation & plc Chairman and CEO, reporting record net income of $332 million on revenues of $2.3 billion for the quarter ended May 31, 2004 compared to pro forma net income of $124 million, on pro forma revenues of $1.6 billion for the same quarter in 2003.

Net income for the six months ended May 31, 2004 was $535 million, on revenues of $4.2 billion, compared to pro forma net income of $272 million on pro forma revenues of $3.3 billion for the same period in 2003.

Carnival Corporation and P&O Princess plc entered into a DLC structure on April 17, 2003, which effectively made Carnival Corporation and P&O Princess plc a single economic entity. The results for the second quarter of 2003 include only six weeks of the results of Carnival plc. Consequently, the company believes that the most meaningful comparison of financial results and revenue and cost metrics is to the comparable 2003 pro forma results and metrics, which reflect the operations of both Carnival Corporation and Carnival plc as if the companies had been consolidated throughout 2003.

Net revenue yields (net revenue per available lower berth day) for the second quarter of 2004 increased 13.2 percent compared to pro forma net revenue yields in the prior year, primarily due to higher net revenue per diems and occupancy levels and, to a lesser extent, the weak U.S. dollar relative to the euro and sterling. Net revenue yields as measured on a local currency basis ("constant dollar basis") increased 10.6 percent over the same period last year. Gross revenue yields increased 13.2 percent.

Net cruise costs per available lower berth day ("ALBD") for the second quarter of 2004 were flat compared to pro forma costs for the same period last year. This result was achieved despite the impact of the weak dollar, which has the effect of increasing cruise costs per ALBD. On a constant dollar basis, net cruise costs per ALBD declined 2.7 percent from the same period last year due to economies of scale from our 22 percent capacity increase and synergies from the DLC transaction. Gross cruise costs per ALBD increased 3.4 percent compared to the prior year.

"Even with a 22 percent capacity growth, we achieved a 13 percent improvement in revenue yields," commented Arison. "This, along with the synergies we realized from the P&O Princess combination, contributed to earnings more than doubling during the second quarter compared to last year's comparable quarter," he added.

"This quarter also marks the first anniversary of the merger with P&O Princess and we're very pleased with the progress and performance thus far," Arison said. "In addition to a record breaking quarter, we also introduced seven new ships in just seven months. Despite the ambitious newbuild delivery schedule, each introduction has been extremely smooth, with all of these ships enjoying great success in their respective markets."

Three new ships joined the fleet during the second quarter of 2004. Holland America Line's new 1,848-passenger Westerdam was delivered in April and launched a series of European cruises. Princess Cruises' 3,114-passenger Caribbean Princess was also delivered in April and began year-round Caribbean cruises from Fort Lauderdale, Fla. In addition, the 2,674-passenger Sapphire Princess was delivered in late May and just entered service last week with an Alaskan summer program, followed by a series of Pacific cruises beginning in September.

These vessels joined the four other ships that were introduced in the last seven months, including the Costa Fortuna in November 2003, Queen Mary 2 in January 2004, and the Carnival Miracle and Diamond Princess in February 2004.

Comments on Outlook for Remainder of 2004

Looking forward, Arison indicated that he was extremely pleased with the outlook for the remainder of 2004. Advance booking levels for the second half of 2004 are significantly ahead of last year's levels at this time on a capacity adjusted basis, with pricing showing continuing strength. "Cruising is an increasingly popular vacation choice. More customers are booking further in advance resulting in a notable expansion in the booking curve for the second half of the year, which is also extending into 2005," Arison explained.

For the full year of 2004, the company currently expects net revenue yields to increase approximately 6 to 8 percent (4 to 6 percent on a constant dollar basis), compared to pro forma 2003. Net cruise costs per ALBD for full year 2004 are expected to be flat to up 2 percent (flat to down 2 percent on a constant dollar basis), compared to pro forma 2003. Based on these estimates, and including better than expected second quarter results, and assuming no major geopolitical events adversely impacting its business, the company expects full year 2004 earnings per share to be in the range of $2.10 to $2.20 per share, versus previous guidance of $2.05 to $2.15 per share. The company's current guidance is based on an exchange rate of $1.19 to the euro and $1.77 to sterling.

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