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Carnival sails past Q4 forecasts, 2018 outlook in line

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Despite the impact of hurricanes, which cost 11 cents per share in the fourth quarter, Carnival Corp. & plc sailed past Wall Street's forecast and its own guidance to post adjusted net income of $452m, or 63 cents per share, compared to $491m, or 67 cents per share a year ago. The outlook for 2018 is in line, apart from the under-consensus Q1.

Analysts had been expecting 51 cents EPS, and Carnival had forecast in the range of 44 cents to 50 cents per share. Stronger pricing for close-in bookings on both sides of the Atlantic helped the quarter.

Adjusted net income excludes unrealized gains and losses on fuel derivatives and other net charges, totaling $94m in net gains for the recent quarter and $118m of net gains in Q4 2016.

US GAAP net income was $546m, or 76 cents EPS, compared to $609m, or 83 cents EPS.

In constant currency, net revenue yields increased 4.2% for the quarter, better than September guidance of up 1.5% to 2.5%.

Revenues were nearly $4.3bn, up from $3.9bn in Q1 2016.

Full year adjusted net income was $2.8bn, or $3.82, higher than adjusted net income of $2.6bn, or $3.45 EPS, in 2016. US GAAP net income was $2.6bn, or $3.59 EPS, compared to $2.8bn, or $3.72 in 2016.

Full year revenues were $17.5n, up from $16.4bn in 2016.

'We exceeded the high end of our original full year 2017 guidance by 22 cents per share, achieving record cash from operations of $5.3 billion and another adjusted earnings per share record despite a significant drag from fuel and currency,' said Arnold Donald, president and CEO, Carnival Corp. & plc. The full-year performance was led by more than 4.5% higher ticket prices.

The company also projected 2018 earnings in line with Wall Street's expectations. Full year 2018 adjusted earnings per share are forecast in the range of $4 to $4.30, up from $3.82 in 2017, and compared to the $4.29 consensus.

Currently, cumulative advance bookings for 2018 are ahead of the prior year at higher prices. Since November, booking volumes for 2018 have been running well ahead of the prior year at higher prices.

'Despite booking disruptions from this year's multiple hurricanes, we are still heading into 2018 with a stronger base of business and higher prices than last year,' Donald said. He cited 'numerous efforts under way to keep the momentum going in 2018 and beyond,' including innovative approaches to increase consideration for cruising such as the just-announced partnership with Univision and the further roll-out of a cutting-edge revenue management system.

Also, four new ships will be delivered: Carnival Horizon, Seabourn Ovation, AIDAnova and Nieuw Statendam.

Based on current booking trends, the company expects full year 2018 net revenue yields in constant currency to be up approximately 2.5% compared to 2017. Full year net cruise costs excluding fuel per available lower berth day in constant currency are expected to go up approximately 1%.

As a result of higher fuel prices, forecasted fuel costs for 2018 are expected to increase approximately $117m compared to the prior year, net of realized fuel derivatives, reducing earnings by 16 cents per share. This is partially offset by favorable movements in currency exchange rates, which should give an 8-cent boost to EPS.

Carnival projects Q1 adjusted earnings per share in a range of 37 cents per share 41 cents per share, weaker than Wall Street's 46-cent consensus and versus 2017's Q1 adjusted earnings per share of 38 cents.