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Stronger ticket pricing, cost controls boost CCL's Q2

Carnival Corp. & plc shot past second quarter profit expectations on higher ticket pricing and on-board revenue, especially from the North American brands and Carnival Cruise Line in particular. Cost controls also helped.

Non-GAAP net income was $193m, or 25 cents per share, compared to $73m or 9 cents per share a year ago. US GAAP net income, which included unrealized gains on fuel derivatives of $34m and $7m of restructuring expenses, was $222m, or 29 cents per share, up from $98m, or 13 cents EPS.

Analysts had expected a profit of 16 cents per share.

Revenues were $3.6bn, in line with the prior year.

'Our initiatives to create demand and leverage our scale benefited both cruise ticket prices and on-board revenues, contributing to 5% revenue yield improvement [constant currency] this quarter. While all of our North American brands enjoyed strong revenue yield improvement, our Carnival Cruise Line brand performed particularly well again this quarter,' said Arnold Donald, president and ceo of Carnival Corp. & plc. 

Carnival reported fleetwide booking volumes over the last 13 weeks for the next three quarters were running well ahead of last year at slightly lower prices due to transactional currency impacts. At this time, cumulative advance bookings for the next three quarters are well ahead of the prior year at slightly lower prices because of transactional currency impacts.

Thanks to stronger booking volumes, Carnival has less inventory remaining for sale, building the company's confidence it will achieve significant revenue yield improvement this year, Donald said.

'We are stepping up our marketing investment for the remainder of the year to further solidify our base of business for 2016 and drive continued yield improvement as we progress on our path toward double digit return on invested capital,' he added.

The company continues to expect full year 2015 net revenue yields on a constant currency basis to be up 3% to 4%, excluding translational and transactional currency impacts, compared to the prior year (up 2% to 3% on a constant dollar basis compared to the prior year).

Carnival now expects full year 2015 net cruise costs excluding fuel per available lower berth day to be up approximately 3% compared to the prior year on a constant dollar basis, which is slightly higher than had been anticipated in the March guidance mainly due to increased investment in advertising.

Carnival raised its full year 2015 non-GAAP EPS guidance by a nickel at the lower end, to be in the range of $2.35 to $2.50, compared to 2014 non-GAAP EPS of $1.93.

For Q3, Carnival forecasts non-GAAP EPS in the range of $1.56 to $1.60 versus 2014 non-GAAP earnings of $1.58 per share.