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Carnival Corp.'s Q4 outperforms, net yields beat 2019's

Carnival Corp. & plc ended 2023 on a high note with a lower than expected net loss, record revenues and a strong booked position. Shares rose more than 6% at market open.

Anne Kalosh, Editor, Seatrade Cruise News & Senior Associate Editor, Seatrade Cruise Review

December 21, 2023

4 Min Read
Credit: Seatrade Cruise News

The company achieved positive full year adjusted net income, outperforming in all four quarters, 'buoyed by a strengthening demand environment across all our brands,' Carnival Corp. & plc CEO Josh Weinstein said.

'Net yields for the fourth quarter continued on a positive trajectory, were significantly higher than a very strong 2019 and even higher than we had anticipated, enabling us to overcome four years of high cost inflation to deliver 5% higher per unit EBITDA than 2019 (holding fuel and currency constant),' he added.

Plus, nearly two-thirds of 2024 inventory is already booked.

Fourth quarter

Adjusted net loss of $90m, or 7 cents per share, was lower than Wall Street's expectation of a 13-cent per share loss. US GAAP net loss was $48m, or 4 cents per share.

Adjusted EBITDA of $946m exceeded the September guidance range, driven by continued strength in demand, which drove ticket prices higher.

Revenues reached a record $5.4b, above the consensus forecast of $5.31b.

101% occupancy

Occupancy topped 101%.

Adjusted cruise costs excluding fuel per available lower berth day (in constant currency) increased 11% compared to Q4 2019 and were in line with September guidance.

Total customer deposits reached a Q4 record of $6.4b, surpassing the previous fourth quarter record of $5.1b at end November 2022 by 25%.

'Thanks to a strong second half of 2023, we are already tracking ahead of our plan to achieve SEA Change, our three-year financial targets calling for the highest adjusted ROIC and adjusted EBITDA per ALBD in nearly two decades. Based on our 2024 guidance, we expect to deliver another big step forward, positioning us more than halfway toward realizing all our 2026 SEA Change targets,' Weinstein said.

Full year 2023

For the full year, Carnival achieved positive adjusted net income of $1m, ahead of its September guidance. The US GAAP net loss was $74m.

Full-year revenues hit an all-time high of $21.6b.

2024 outlook

'We entered the year with the best booked position we have ever seen, and now have nearly two-thirds of our occupancy already on the books for 2024, at considerably higher prices (in constant currency),' Weinstein said. 'We continue to experience strong bookings momentum across the board, with our European brands showing remarkable strength during the quarter with booking volumes running up well into the double digits at considerably higher prices (in constant currency).'

For the full year, the company expects adjusted EBITDA of approximately $5.6b, over 30% growth compared to 2023, with net yields (in constant currency) up approximately 8.5% compared to 2023. Full year occupancy is expected to return to historical levels with 'nicely higher' net per diems (in constant currency) reflecting continued strength in pricing and on-board spending

Adjusted cruise costs excluding fuel per ALBD (in constant currency) are forecast to be up approximately 4.5% compared to 2023.

For Q1, Carnival projects net yields (in constant currency) up approximately 16.5% compared to Q1 2023, with occupancy returning to historical levels as the company closes the remaining occupancy gap in the first half.

Adjusted cruise costs excluding fuel per ALBD (in constant currency) are expected to be up approximately 9.5% year over year primarily due to higher occupancy levels, the timing of advertising and dry dock-related expenses. The company plans 596 dry dock days, a 14% increase.

Financing and capital activity

'During 2023, we made debt payments of $6 billion and ended the year with just over $30 billion of debt, which is $3 billion better than we forecasted just nine months ago during our March conference call and almost $5 billion off the first quarter peak,' CFO David Bernstein noted.

He said Carnival will continue to evaluate refinancing opportunities and opportunistically prepay additional debt. 'Furthermore, we expect durable revenue growth to drive increases in adjusted free cash flow in 2024 and beyond, which will be the primary driver for paying down our debt balances on our path back to investment grade,' Bernstein added.

During 2023, the company generated cash from operations of $4.3b and adjusted free cash flow of $2.1b, making a significant contribution toward rebuilding its financial strength.

See also 'Carnival draws new cruisers, keeps up ad spending heading into a "different" wave,' 'Carnival leverages scale with Starlink, MAST to optimize costs' and 'Carnival Corp. downplays geopolitical and other concerns'

About the Author

Anne Kalosh

Editor, Seatrade Cruise News & Senior Associate Editor, Seatrade Cruise Review

Anne Kalosh covers global stories, reporting both breaking and in-depth news on cruising's significant people, places, ships and trends. A sought-after expert on cruising, she has moderated conferences around the world, including the high-profile State of the Industry panel at Seatrade Cruise Global. She created and led the acclaimed itinerary-planning case study for Seatrade's cruise master classes held at Cambridge and Oxford universities. She has been the cruise columnist for AFAR.com, and her freelance stories have appeared in a wide range of publications, from The New York Times to The Miami Herald.

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