Carnival Corporation & plc reduced net loss and reported a small operating income for the second quarter of its financial year, the company said in a statement.
Operating income for the second quarter of 2023 was $120 million, turning positive for the first time since the resumption of guest cruise operations and marking a significant milestone.
“Adjusted EBITDA for the second quarter of 2023 was $681 million, at the high end of the March guidance range of $600 million to $700 million,” Carnival said.
Net loss in the three months to 31 may narrowed to $1,100million from $1,834 million, while revenues rose to$4,931 million from $2,401 million.
For the first half of its financial year, Carnival reported a net loss of $1,100 million compared to a loss of $3,726 million a year earlier. Revenues rose to $9,343 million from $4,029 million.
Chief Executive Officer Josh Weinstein commented: "We reached a meaningful inflection point for revenue this quarter, with net yields surpassing 2019's strong levels, and we achieved positive operating income, cash from operations and adjusted free cash flow."
"We are already executing on our strategy to grow revenue by taking up ticket prices, even while maintaining record onboard spending levels, building occupancy and growing capacity."
"Based on continued strength in pricing, we delivered outperformance in the second quarter and raised our expectation for revenue in the second half, which coupled with the interest expense benefit we are capturing from deleveraging will bring another $275 million dollars to the bottom line for the year."
"With bookings and customer deposits hitting all-time highs, we are clearly gaining momentum on an upward trajectory. We are focused on the durable revenue growth and margin improvement that will deliver on our SEA Change Program and propel us on the path to delevering and investment grade leverage metrics," he said in the statement
Second Quarter 2023 Results and Statistical Information
Record second quarter revenue of $4.9 billion.
While gross margin yields were down compared to 2019, the company achieved a significant milestone of net yields in constant currency surpassing 2019 levels, above March guidance by 3.2% in constant currency.
Cruise costs per available lower berth day ("ALBD") increased 8.3% as compared to the second quarter of 2019.
In constant currency, adjusted cruise costs excluding fuel per ALBD (see "Non-GAAP Financial Measures" below) increased 13.5% compared to the second quarter of 2019 and were above the high end of March guidance primarily due to the timing of expenses between the quarters.
Costs were higher as compared to 2019 as a result of higher dry-dock related expenses, higher advertising investments to drive revenue for 2023 and beyond, incentive compensation increases reflecting expected improvements in the company's current and long-term performance, as well as partially mitigating the impacts of a high inflation environment.
Total customer deposits reached an all-time high of $7.2 billion as of May 31 2023, surpassing the previous record of $6.0 billion as of May 31, 2019 by over $1 billion, driven by strong demand, bundled package offerings and pre-cruise sales, and a 26% increase compared to the prior quarter.
Bookings
The company saw continued acceleration of demand, with total bookings made during the quarter reaching a new all-time high for all future sailings. Booking volumes for the second quarter exceeded the first quarter's booking volumes, which was the previous record high.
Weinstein noted, "Our momentous wave period, typically a first quarter event, started in record breaking fashion at the end of the fourth quarter, set a record in the first quarter, actually accelerated in the second quarter and has continued into the third quarter. Booking volumes have been tremendous and we are gaining momentum with favorable pricing trends, which reflects improved commercial execution and returns on our advertising investments.”
“The booking lead times for our North America and Australia ("NAA") segment are now further out than we have ever seen, while lead times for our Europe segment continue to lengthen and are now within 10 percent of 2019 levels, which is an improvement of 10 points from the last quarter. In fact, our European brands' bookings taken this past quarter for second half 2023 sailings for European deployments achieved double digit percentage increases in both volume and price compared to 2019. Clearly the strength of our portfolio of world class brands is now shifting into high gear," he said
The company's cumulative advanced booked position for the remainder of 2023 is at higher ticket prices in constant currency, despite headwinds from the loss of St. Petersburg as a marquee destination due to the suspension of cruises to Russia (normalized for future cruise credits), as compared to strong 2019 pricing and a booked occupancy position that is near the high end of the historical range.
The company's current booking trends are compared to booking trends for 2019 as it is the most recent full year of guest cruise operations.
Aligned with the company's yield management strategy, and while still early, the cumulative advanced booked position for full year 2024 is above the high end of the historical range at strong prices.
