Carnival introduces three year strategic SEA Change Program

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Written by Kari Reinikainen Kari Reinikainen

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Published: 26 June 2023 26 June 2023

 

Carnival Corporation & plc said it is introducing SEA Change Program, a set of key performance targets designed to reflect the achievement of important strategic goals over a three-year period ending in 2026, including:

Sustainability - More than 20% reduction in carbon intensity compared to 2019, improving upon the company's industry leading fuel-efficiency and pulling forward its stated 2030 carbon intensity reduction goal by several years,

EBITDA - 50% increase in adjusted EBITDA per ALBD compared to 2023 June guidance, representing the highest level in almost two decades,

Adjusted ROIC - 12% adjusted Return on Invested Capital ("ROIC"), more than doubling adjusted ROIC from 2023 to 2026, and representing the highest level in almost two decades. Adjusted ROIC excludes goodwill and intangibles to compare against historical performance.

By the end of 2026, the company is expecting to approach investment grade leverage metrics.

The company's targets are built on measured net capacity growth of less than 2.5% compounded annually from 2023. “To achieve these three-year targets, the company will continue with its focus across the portfolio on a range of initiatives to drive net yield growth while maintaining its industry leading cost base and fuel efficiency to continue to improve margins and grow adjusted free cash flow, which the company believes will enable further debt reduction over time,” the company said in a statement.

Carnival reports small second quarter operating income as quarterly revenues hit record

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Written by Kari Reinikainen Kari Reinikainen

Category: More News More News

Published: 26 June 2023 26 June 2023

 

 

 

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.

Canada announces mandatory environmental measures for cruise ships

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Written by Teijo Niemelä Teijo Niemelä

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Published: 26 June 2023 26 June 2023

Even though cruise ships are important to Canada's domestic tourism sector, representing more than $4 billion annual input into the Canadian economy and directly and indirectly generating approximately 30,000 middle-class jobs per year, Canada has decided to ensure they are doing so in a more sustainable manner moving forward.

The Canadian Minister of Transport Omar Alghabra, announced on June 23 mandatory environmental measures for cruise ships effective immediately. The measures address discharges of greywater (the drainage from sinks, laundry machines, bathtubs and showers, or dishwaters) and sewage (wastewater from bathroom and toilets).

These mandatory measures for the cruise ship industry include:

– Prohibiting the discharge of greywater and treated sewage within three nautical miles from shore where geographically possible across Canada;
– Strengthening the treatment of greywater together with sewage before it is discharged between three and twelve nautical miles from shore south of 60°N using an approved treatment device in non-Arctic waters. This will complement existing regulations for Arctic waters under the Arctic Waters Pollution Prevention Act; and
– Reporting compliance with these measures in Canadian waters upon request.

The Government of Canada had announced these measures last year for the cruise ship industry on a voluntary basis, but going forward, cruise ships will be subject to fines for non-compliance with these measures, up to the maximum permitted ($250,000) under the Canada Shipping Act, 2001. These measures will better protect Canada’s oceans and the marine environment, and will support the work that is underway to conserve 25 percent of Canada’s oceans by 2025 and 30 percent by 2030.

“These measures apply to cruise ships transiting through Canada’s Marine Protected Areas and marine refuges, and making them mandatory underlines our commitment to safeguarding our oceans for future generations as we support economic opportunities. With the threat of climate change and ongoing human activities impacting oceans, protecting them now has never been more urgent," said Omar Alghabra Minister of Transport

Cruise Liverpool, Fred. Olsen Cruise Lines inspire school children

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Written by Kari Reinikainen Kari Reinikainen

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Published: 23 June 2023 23 June 2023

A class of Year 5 pupils set foot on board Fred. Olsen Cruise Lines’ Borealis with Cruise Liverpool as part of The Johnson Foundation’s My Big Future – a work experience initiative designed to inspire the next generation, said Cruise Liverpool that promotes the UK north west city in a statement.

“Last Friday, 26 children from Christ Church Primary School in Birkenhead, Wirral, were invited to spend the day at Cruise Liverpool, with a surprise visit on board Fred. Olsen Cruise Lines’ Borealis to explore the range of opportunities and careers available on board,’ Cruise Liverpool said.

Each pupil wrote their own CV and undertook out a mock job interview at Cruise Liverpool before the visit to the terminal where they enjoyed a tour of the ship, including a light show and talk from the Fleet Entertainment Technical Manager, the Executive Chef and Sous Chef alongside members of Cruise Liverpool’s team.

Peter Deer, Managing Director of Fred. Olsen Cruises Lines that operates cruises from the city, said: “As a business that places a huge amount of importance on supporting local communities, we are proud to have supported the Johnson Foundation’s My Big Future programme – a phenomenal way of helping to support and develop local communities.”

The Johnson Foundation was established by Wirral businessman and philanthropist Peter Johnson in 1987, to promote any charitable purposes for the benefit of the Liverpool City Region and has since raised over £10 million for charitable causes in the area.

A representative at the Johnson Foundation said: “Our ‘My Big Future’ programme wouldn’t and couldn’t exist without forward thinking business and organisations such as Cruise Liverpool and Fred. Olsen Cruise Lines. Their unwavering support, dedication and open mindedness has been astounding from the start. They truly understand and are just as passionate as us about inspiring little minds and raising aspirations from a young age. Some of the children in our group today come from particularly deprived / disadvantaged areas – some from families where two or three generations maybe haven’t gone to work.”