Carnival earnings and bookings take a hit

Carnival Triumph File PhotoJUNE 25, 2013 — Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) looks to still be feeling the impact from a series of much publicized incidents such as the Carnival Triumph fire.

Carnival Triumph

A recent Harris Poll finds that perceptions for the top cruise industry brands have not only remained below their levels prior to the recent incidents, but have continued to decline. You can download the poll HERE

Today Carnival Corporation released second quarter non-GAAP net income of $72 million, or $0.09 diluted EPS compared to non-GAAP net income for the second quarter of 2012 of $159 million, or $0.20 diluted EPS. For the second quarter of 2013, reported U.S. GAAP net income, which included net unrealized losses on fuel derivatives of $31 million, was $41 million, or $0.05 diluted EPS. For the second quarter of 2012, reported U.S. GAAP net income, which included unrealized losses on fuel derivatives of $145 million, was $14 million, or $0.02 diluted EPS. Revenues for the second quarter of 2013 were $3.5 billion, in line with the prior year.

Carnival Corporation & plc Chairman and CEO Micky Arison noted that second quarter earnings were slightly better than May guidance due primarily to the timing of selling and administrative expenses.

Key metrics for the second quarter 2013 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") decreased 1.9 percent for 2Q 2013. Gross revenue yields decreased 3.1 percent in current dollars. Net cruise costs excluding fuel per ALBD increased 8.8 percent in constant dollars, primarily due to the timing of dry-dock expenses, vessel repair costs and non-recurring items which benefitted the prior year. Gross cruise costs including fuel per ALBD in current dollars decreased 0.1 percent. Fuel prices decreased 9.7 percent to $683 per metric ton for 2Q 2013 from $756 per metric ton in 2Q 2012. Fuel consumption per ALBD decreased 5.7 percent in 2Q 2013 compared to the prior year.

2013 Outlook

"At this time," says Carnival Corporation, "cumulative advance bookings for the remainder of 2013 are behind the prior year at prices below the prior year levels. Since the end of March, fleetwide booking volumes for the next three quarters, excluding Carnival Cruise Lines, are running higher than the prior year at higher prices. Booking volumes for Carnival Cruise Lines during the same period are running behind the prior year at lower prices."

Mr. Arison noted, "Our 90,000 global team members are dedicated to delivering an outstanding vacation experience to 10 million guests each year. The level of quality, variety and innovation available throughout our fleet has never been greater and our guests are reaping the benefits of truly exceptional vacation values. We are working to more broadly communicate that message through stepped up consumer and trade marketing efforts, as well as strengthened engagement of our travel agent partners. We believe these initiatives, combined with slower supply growth, will lead to increased yields."

Mr. Arison also stated, "In addition, we remain focused on reducing our fuel dependence. By year end, we will achieve a 23 percent cumulative reduction in fuel consumption since 2005 and expect our research and development efforts in fuel saving technologies to continue to bear fruit. We have strengthened our management teams in maritime and technical ship operations and product delivery, as well as marketing and communications. We expect the combination of these efforts will drive improved return on invested capital over time."

The company expects full year net revenue yields, on a constant and current dollar basis to be down 2 to 3 percent compared to the prior year, in line with the May guidance. The company also expects full year net cruise costs excluding fuel per ALBD to be higher by 3.5 to 4.5 percent compared to the prior year on a constant and current dollar basis.

Taking the above factors into consideration, the company forecasts full year 2013 non-GAAP diluted earnings per share to be in the range of $1.45 to $1.65, compared to 2012 non-GAAP diluted earnings of $1.88 per share.

Third Quarter 2013 Outlook

Third quarter constant dollar net revenue yields are expected to be down 3.5 to 4.5 percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the third quarter are expected to be higher by 8.5 to 9.5 percent on a constant dollar basis compared to the prior year, the majority of which is due to costs associated with the previously announced vessel enhancement initiatives and increased marketing expenses, as well as higher pension plan contributions.

Based on the above factors, the company expects non-GAAP diluted earnings for the third quarter 2013 to be in the range of $1.25 to $1.33 per share versus 2012 non-GAAP earnings of $1.53 per share.

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