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Coronavirus hits Carnival's Q1 by 23¢/share, full-year loss, newbuild delays seen

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Carnival Corp. & plc said coronavirus hurt its first quarter earnings by 23 cents per share, advance bookings/pricing for the rest of 2020 are lower and newbuilds are likely to be delayed.

The company reiterated its forecast for a net loss in fiscal 2020 and said it is taking additional actions to improve liquidity, including capital expenditure and expense reductions, and pursuing additional financing.

$932m goodwill/impairment charges

First quarter adjusted net income was $150m, or 22 cents per share, down from $338m, or 49 cents per share, in first quarter 2019. This excludes net charges of $932m for the recent quarter and net charges of $2m for Q1 2019.

US GAAP net loss was $781m, or a loss of $1.14 per share, compared to net income of $336m, or 48 cents per share a year ago. This includes the $932m of goodwill and ship impairment charges, reduced by net gains on ship sales.

Coronavirus impact

The 23-cent per share impact from COVID-19 includes canceled voyages and other voyage disruptions, and excludes the mentioned impairment charges. Other previously disclosed voyage disruptions noted in Carnival's December earnings call impacted the quarter by about 12 cents per share.

Total revenues were $4.8bn, up from $4.7bn in Q1 2019.

2021 outlook

For the first half of 2021, booking volumes since the mid-December call through March 1 were running slightly higher than the prior year. Also for the first half of 2021 and during the two weeks ended March 15, Carnival booked 546,000 occupied lower berth days, albeit 'considerably behind' the prior year pace. As of March 15, cumulative advance bookings for the first half of 2021, were slightly lower than the prior year.

Last seven weeks' booking volumes 'meaninfully' behind

Wave season started strong with booking volumes for the three weeks ending Jan. 26 running higher than the prior year for the remaining three quarters on a comparable basis. For the seven-week period Jan. 26 to March 15, booking volumes for the remainder of the year were 'meaningfully' behind the prior year on a comparable basis, reflecting the impact of coronavirus on the market. As of March 15, cumulative advance bookings for the remainder of 2020 were 'meaningfully' lower than the prior year at prices that are 'considerably' lower than the prior year.

Carnival Corp.'s global cruise operations are temporarily paused, and the company reiterated its inability to provide an earnings forecast due to the uncertainty but said it expects a net loss in both an adjusted and US GAAP basis for the fiscal year ending Nov. 30.

Shipyards affected

Carnival also expects coronavirus to impact the yards where its ships are under construction, which will result in newbuild delays.

$11.7bn liquidity

At Feb. 29, Carnival had $11.7bn of liquidity. This included $3bn of immediate liquidity plus $2.8bn from four committed export credit facilities that are available to fund the originally planned ship deliveries for the remainder of this year and $5.9bn from committed export credit facilities that are available to fund ship deliveries originally planned in 2021 and beyond.

On March 13, the company fully drew down its $3bn multi-currency revolving credit agreement to increase its cash position and preserve financial flexibility.

Carnival said substantially all of its assets, with the exception of certain ships with a net book value of approximately $6bn at Feb. 29, are currently available to be pledged as collateral.


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