Carnival Corp. Reports $1.3 Billion in Third Quarter Profits

Carnival Corp. Reports $1.3 Billion in Third Quarter Profits

Carnival Corp. & plc reported net income of $1.3 billion, or $1.62 diluted earnings per share, on revenues of $4.4 billion for its third quarter ended Aug. 31. Net income for the third quarter of 2009 was $1.1 billion, or $1.33 per share, on revenues of $4.1 billion.

Carnival Chairman and CEO Micky Arison noted that earnings per share increased 22 percent over 2009 and were just 3 percent shy of third-quarter record profits. The third quarter operating results were significantly better than anticipated in the company’s June guidance due to the combination of higher-than-expected revenue yields and lower-than-expected unit costs.

The third quarter was impacted by two unusual items, which reduced earnings by $24 million (3 cents per share) -- a $41 million charge to operating expense relating to a billing from the British Merchant Navy Officers Pension Fund partially offset by a $17 million litigation settlement.

Continuing with its strategic growth initiatives, the company took delivery of Holland America Line’s 2,106-passenger Nieuw Amsterdam and signed a new ship order with Germany’s Meyer Werft for the construction of a 2,192-passenger cruise ship for AIDA Cruises to be delivered in spring 2013. This marks the seventh new ship ordered for the German cruise market in the past six years.

Since June, booking volumes for the remainder of 2010 and the first half of 2011 are running ahead of the prior year at prices in line with prior year levels. At this time, cumulative advance bookings for the remainder of the year and the first half of 2011 are at higher prices with occupancies for the fourth quarter in line with the prior year and for the first half of 2011 slightly behind last year.

Carnival Corp. expects full year 2010 net revenue yields, on a constant dollar basis, to increase 2.5 percent, in line with its June guidance of an increase of 2 to 3 percent. However, currency exchange rates have moved favorably since June guidance was provided. As a result, the company now expects net revenue yields on a current dollar basis to increase 1 percent for the full year 2010 compared to 2009.

Based primarily on lower costs achieved in the third quarter, the company now expects net cruise costs excluding fuel per ALBD for the full year 2010 to be down 4 percent on a constant dollar basis, which is better than its June guidance of down 2.5 to 3.5 percent.

Since June guidance, favorable changes in currency exchange rates have increased earnings by $30 million. In addition, a decline in fuel prices has reduced forecasted fuel costs by $27 million. Based on current spot prices, fuel costs for full year 2010 are now expected to increase $410 million compared to 2009, costing an additional 51 cents per share.

Taking all the above factors into consideration, Carnival Corp. said it now forecasts full year 2010 fully diluted earnings per share to be in the range of $2.48 to $2.52, which is above June guidance of $2.25 to $2.35 and 2009 earnings of $2.24 per share. The company expects earnings for the fourth quarter 2010 to be in the range of 32 to 36 cents per share, compared to 24 cents per share in 2009.