Carnival's Q4 loss lower than forecast, three more ships to exitCarnival's Q4 loss lower than forecast, three more ships to exit

The company also said three older, less efficient ships, two of them belonging to Costa Cruises, will be leaving the fleet. Two are under contract for sale and the third is 'being worked on,' CFO David Bernstein said. This makes 26 Carnival Corp. vessel exits since the pandemic.

Adjusted net loss of $1.1b, or 85 cents per share, was under the Wall Street consensus for a loss of 87 cents per share and down from the year-ago loss of $1.72 per share. US GAAP net loss was $1.6b, or $1.27 per share.

EBITDA was a loss of $96m, within the previous guidance range of break-even to slightly negative, despite an approximate $40m unfavorable impact from fuel price and currency rates since the Q3 business update.

Revenue

Revenue was $3.8b, under Wall Street's $3.91b consensus, and 80% of 2019 levels. This was up from Q3, at 66% of 2019 levels.

Revenue per passenger cruise day increased 0.5% (3.8% in constant dollars) compared to a strong 2019, overcoming the dilutive impact of future cruise credits and better than Q3 this year, a 4.1% decrease (2.1% in constant dollars) compared to 2019.

Occupancy was 19 points below 2019 levels, on capacity in guest cruise operations approaching 2019 levels. This was better than Q3, which was 29 points below 2019 levels on 8% lower capacity than 2019.

2023 booked higher, at higher rates

The company's full year 2023 cumulative advanced booked position is higher than its historical average at higher prices in constant currency, normalized for FCCs, compared to a strong 2019.

Total customer deposits hit a Q4 record of $5.1b as of Nov. 30, surpassing the previous record of $4.9b as of Nov. 30, 2019.

Liquidity

The quarter ended with $8.6 billion of liquidity.

'Throughout 2022, we have successfully returned our fleet to service, aggressively building occupancy on growing capacity, while driving revenue per passenger cruise day higher than 2019 record levels, both in the fourth quarter and full year overall. We have also actively managed down our costs while investing to build future demand,' Carnival Corp. & plc CEO Josh Weinstein said.

He continued: 'Booking volumes strengthened following the relaxation in protocols, cancellation trends are improving globally, and we have seen a measurable lengthening in the booking curve, across all brands. The momentum has continued into December, which bodes well for 2023 overall as more markets open for cruise travel, protocols continue to relax, our closer to home itineraries play out, our stepped-up advertising efforts pay dividends and our brands continue to hone all aspects of their revenue-generating activities.'

'Prudent' capacity growth

Weinstein said Carnival is delivering 'prudent capacity growth weighted toward our highest returning brands and amplified by nearly a quarter of our fleet consisting of newly delivered vessels.' This should drive revenue growth as the company continues to leverage scale on its industry-leading cost base.

Adjusted cruise costs excluding fuel per available lower berth day continued their sequential quarterly improvement with a 7.2% increase (11% in constant currency — in line with guidance of a low double-digit increase) compared to Q4 2019, down from a 25% increase (same in constant currency) in Q1 2022 as compared to Q1 2019.

Carnival said costs remain higher as a result of higher advertising investments to drive 2023 revenue and partially mitigating the impacts of a high inflation environment. This was in line with the previous guidance of a low double-digit increase in constant currency.

Changes in fuel price, fuel mix and currency rates unfavorably impacted the quarter by $267m compared to Q4 2019.

Three ships to go by spring 2024

The company expects to remove three additional smaller, less efficient ships, two from Costa as part of a strategy to right-size the brand in light of the China's continued closure to cruising. This is apart from the Costa ships transferring to Carnival Cruise Line.

Once completed in spring 2024, the fleet optimization strategy will have reduced Costa's capacity so that it approximates the 2019 capacity Costa dedicated outside of Asia to its core markets in continental Europe.

3% capacity growth in 2023

The company now expects total capacity growth of 3% for 2023 compared to 2019, at the lower end of the previous guidance range of 3% to 5%. This includes newly delivered ships that will represent nearly a quarter of capacity.

Bookings

Booking volumes during Q4 for 2023 sailings are nearing 2019 comparable booking levels, with November booking volumes exceeding 2019 levels. Carnival's North America and Australia segment's Q4 booking volumes for 2023 exceeded the comparable period in 2019. The company's Europe and Asia segment's Q4 2022 bookings for 2023 were lower than the comparable period in 2019.

However, reflecting the closer-in booking pattern of the continental European brands, Q4 bookings for Q4 sailings significantly exceeded the comparable period in 2019. Further, the company continues to see an extension of its Europe-Asia segment's booking curve.