Arison upbeat on Carnival Corporation 2011 outlook

Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) is looking forward to a strong wave season — its heaviest booking period — starting in early January.

“Given the recent cold weather and snow, particularly in the Northern U.S. and Europe, there is no better time to book a cruise vacation,” says Chairman and CEO Micky Arison.

In fact, Mr. Arison’s optimism is founded on more than the weather.

“All-in-all, 2010 was an encouraging year with improved business trends from a gradually recovering economy,” he said today. “We achieved an 11 percent increase in net income on 7 percent higher revenues. We recovered almost 3 points of revenue yield (constant dollars) from 2009’s levels, while improved processes and efficiencies led to a 3 percent reduction in unit costs excluding fuel.”

Mr. Arison added, “Cash from operations increased 14 percent to reach $3.8 billion, more than enough to fund our expansion program which peaked this year at a capital investment of $3.6 billion. We also reinstated the dividend early in 2010 at an initial rate of $0.10 per quarter.”

For its fourth quarter ended November 30, 2010,.Carnival reported net income of $248 million, with earnings per share increasing almost 30 percent to $0.31 diluted EPS, on revenues of $3.5 billion. Net income for the fourth quarter of 2009 was $193 million, or $0.24 diluted EPS, on revenues of $3.3 billion.

Earnings per share in the fourth quarter was just $0.01 below the company’s September guidance despite the recently announced voyage disruptions, which reduced earnings by $0.07 per share.

The company reported net income for the full year ended November 30, 2010 of $2.0 billion, or $2.47 diluted EPS, compared to net income of $1.8 billion, or $2.24 diluted EPS, for the prior year. Revenues for the full year 2010 were $14.5 billion compared to $13.5 billion for the prior year.

2011 OUTLOOK

Carnival reports that since last September, booking volumes continued to be strong and prices for those bookings are higher than last year. At this point in time, cumulative advance bookings for 2011 are at higher prices with slightly lower occupancies versus last year. Based on these booking trends, the company forecasts a 3 to 4 percent increase in constant dollar net revenue yields for the full year 2011.

Looking forward Mr. Arison noted, “Booking trends have continued to improve for both our North American and European brands, particularly for our peak summer season. We are optimistic these positive trends are an indicator of a strong wave season, our heaviest booking period which begins in early January. The company expects net cruise costs per average lower berth day excluding fuel for the full year 2011 to be flat compared to the prior year on a constant dollar basis. Based on current spot prices for fuel, forecast fuel costs for the full year are expected to increase $134 million compared to 2010, costing $0.17 per share. This is forecast to be partially offset by favorable movements in currency exchange rates worth $0.04 per share.

Taking all the above factors into consideration, the company forecasts full year 2011 earnings per share to be in the range of $2.90 to $3.10 fully diluted, compared to $2.47 for 2010.

Mr. Arison added, “Based on the above guidance, we estimate our cash from operations will exceed $4 billion in 2011, while our capital investment commitments decrease to $2.6 billion. We expect to generate significant free cash flow in 2011 and beyond, which should provide us ample opportunities to return additional cash to shareholders over time.”

FIRST QUARTER 2011

First quarter constant dollar net revenue yields are expected to increase by approximately 2 percent compared to the prior year. The company expects improved net revenue yields as the year progresses. Net cruise costs per ALBD excluding fuel for the first quarter are expected to be up 3 to 4 percent compared to the prior year on a constant dollar basis due primarily to the $44 million gain from the sale of P&O Cruises’ (UK) Artemis in the first quarter of 2010. Excluding the Artemis gain and fuel, net cruise costs per ALBD for the first quarter are expected to be flat to up 1 percent on a constant dollar basis. Forecasted fuel costs for the first quarter are expected to increase $25 million compared to the prior year, costing $0.03 per share.

Based on current fuel prices and currency exchange rates, the company expects fully diluted earnings for the first quarter 2011 to be in the range of $0.15 to $0.19 per share, down from $0.22 per share in 2010. The first quarter of 2010 included the favorable impact of $0.10 per share of unusual items.

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December 21, 2011