10-QPeriod: Q2 FY2008

CARNIVAL CORP Quarterly Report for Q2 Ended May 31, 2008

Filed June 27, 2008For Securities:CCL

Summary

Carnival Corporation & plc's Q2 2008 filing shows robust revenue growth driven by capacity expansion and increased ticket pricing, partially offset by higher fuel costs and a weaker US dollar. Total revenues for the three months ended May 31, 2008, increased by 16.5% to $3.4 billion compared to the prior year, with a 8.3% increase in Available Lower Berth Days (ALBDs). While operating income saw a modest increase, net income remained stable at $390 million, leading to a slight decrease in diluted EPS to $0.49 from $0.50 due to increased interest expenses from higher borrowings. The company continues to invest heavily in its new shipbuilding program, which is a key driver of future capacity growth but also contributes to increased depreciation and amortization expenses. Financially, Carnival managed its debt effectively, increasing long-term borrowings to fund its capital expenditures while also repaying significant portions of existing debt. The company maintains substantial liquidity, supported by its credit rating and access to revolving credit facilities. Despite rising operating costs, particularly fuel, and the impact of foreign currency fluctuations, Carnival's strategic focus on European market expansion and yield improvements appears to be a core driver of its top-line growth. Investors should monitor fuel price trends, currency exchange rates, and the ongoing integration of new vessels into the fleet as key factors influencing future profitability.

Key Highlights

  • 1Total revenues increased by 16.5% to $3.4 billion for the three months ended May 31, 2008, compared to the same period in 2007.
  • 2Net income remained flat at $390 million for the three months ended May 31, 2008, compared to $390 million in 2007.
  • 3Diluted earnings per share decreased slightly to $0.49 from $0.50 for the three months ended May 31, 2008, compared to the prior year.
  • 4The company experienced a significant increase in fuel costs, up 59% per metric ton year-over-year for the three-month period.
  • 5Carnival Corporation's capacity, measured by ALBDs, increased by 8.3% for the three months ended May 31, 2008.
  • 6Long-term debt increased significantly, with $3.8 billion borrowed and $3.4 billion repaid during the six months ended May 31, 2008.
  • 7Customer deposits increased by $798 million to $3.6 billion, reflecting strong advance bookings and the seasonal nature of the business.

Frequently Asked Questions

Total revenues for the three months ended May 31, 2008, increased by 16.5% to $3.4 billion compared to $2.9 billion in the same period of 2007. This growth was driven by an 8.3% increase in capacity (ALBDs) and higher ticket pricing, including fuel supplements, as well as the impact of a weaker US dollar against the euro and sterling.

Fuel costs per metric ton increased significantly by 59% to $530 for the three months ended May 31, 2008, compared to $333 in the prior year. This led to a substantial increase in fuel expense, impacting operating costs.

Carnival Corporation & plc increased its long-term debt, borrowing $3.8 billion and repaying $3.4 billion during the first six months of fiscal 2008. The company maintained substantial liquidity, with over $5 billion available at May 31, 2008, through cash, credit facilities, and committed financing.

As of June 19, 2008, the company expected diluted EPS for the third quarter and full year of 2008 to be in the range of $1.56 to $1.58 and $2.70 to $2.80, respectively. This guidance was based on then-current fuel prices and currency exchange rates.