Carnival seen to perform better in 2016 than this year

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 23 June 2015 23 June 2015

The statement from Carnival has a very strong bullish tone, and there’s little doubt its earnings will get a further lift in the current year, after net income advanced about 12% in FY2014, said Ken Odeluga, a senior market analyst at Cityindex in London.

“But a lift is all the market expects, with profits looking set to rise by a modest 2.5%, or perhaps even less now, given the measured guidance in today’s report,” he said in a reaction to Carnival group’s second quarter interim results released earlier today.

“There’s a clue in one of Carnival’s most assertive statements in the report, that it’s "stepping up…marketing investment for the remainder of the year to further solidify our base of business for 2016".

"2015 won’t entirely be a write-off in earnings terms, but the tough comparable earnings of the year before have presented a high hurdle amid low margin for error year-to-year, and it makes sense to expect growth in 2016 to look better than that expected for 2015,” he concluded.

“Ironically, the crude oil related-benefits which bolstered the cruise line’s earnings in the second half of 2014, are part of the reason why earnings for the current year are going to be softer,” he said

“CCL(Carnival Corp & plc)  got caught on the wrong side of a fuel hedging deal which will cost 6c a share in Q3; at the same time, for now, full-year 2015 net cruise costs excluding fuel are forecast to rise circa 3% says Carnival Corp. Unfortunate, considering CCL said fuel prices it paid “fell 37%” for Q2 2015 vs. Q2 2014,” Odeluga said

Stepped-up “marketing investment” for the remainder of the year, and quarterly net cruise costs, excluding fuel having already risen 6.1% (under an artificially flat currency effects) are further incrementally negative news, which a forecast net revenue yield rise of 3%-4% (again, in flat FX terms) can only vaguely be expected to offset.

Carnival 2015 EPS forecast at $2.35 to $2.50 virtually unchanged

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 23 June 2015 23 June 2015

Carnival Corporation & plc, the Anglo American cruise shipping giant, says it forecasts its full year 2015 non- GAAP diluted earnings per share guidance to be in the range of $2.35 to $2.50.

In its first quarter interim result release on 27 March, the company forecast full year 2015 non- GAAP diluted earnings per share to be in the range of $2.30 to $2.50, compared to 2014 non- GAAP diluted earnings of $1.93 per share.

During the last thirteen weeks, fleetwide booking volumes for the next three quarters were running well ahead of last year at slightly lower prices due to transactional currency impacts, the company said in its second quarter earnings release.

At this time, cumulative advance bookings for the next three quarters are well ahead of the prior year at slightly lower prices again due to transactional currency impacts.

President and CEO Arnold Donald noted: “Current strength in booking volumes clearly demonstrates strong consumer demand for our brands, leaving less inventory remaining for sale and building confidence in achieving significant revenue yield improvement this year.”

“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.”

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

The company now expects full year 2015 net cruise costs excluding fuel per ALBD 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.