01—Abstract
Summary
Summary of the 10-Q filed April 2, 2009. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc's Q1 2009 report shows resilience amid challenging economic conditions.
While total revenues declined by 9.1% year-over-year due to a stronger U.S. dollar and the economic downturn's impact on pricing, the company managed operating income effectively, keeping it flat due to significant cost reductions, particularly in fuel. Net income saw a modest increase to $260 milliona from $236 million in the prior year, and diluted EPS rose to $0.33 from $0.30, indicating improved profitability per share. The company also proactively suspended its quarterly dividend to preserve cash, highlighting a focus on liquidity and financial flexibility.
Carnival's balance sheet shows a reduction in total assets and liabilities compared to the previous year, reflecting a more conservative financial posture. Despite a decrease in cash and cash equivalents, the company maintains substantial liquidity through committed credit facilities.
The company's strategic focus on expanding its European cruise market presence continues, as evidenced by capacity growth in that segment, while managing overall capacity. Despite the external pressures, Carnival demonstrates a commitment to cost control and operational efficiency, positioning itself to navigate the economic headwinds.
02—Key points
Key Highlights
- Net income increased to $260 million, up from $236 million in the prior year's first quarter.
- Diluted Earnings Per Share (EPS) improved to $0.33, compared to $0.30 in the same period last year.
- Total revenues decreased by 9.1% to $2.86 billion, primarily due to a stronger U.S. dollar and the economic downturn impacting pricing and onboard spending.
- Operating income remained stable at $311 million, as cost reductions offset revenue declines.
- Significant decrease in fuel costs by 44.6% ($276/metric ton in 2009 vs. $499/metric ton in 2008) was a key factor in managing expenses.
- The company suspended its quarterly dividend starting in March 2009 to preserve cash and enhance financial flexibility.
- Net cash provided by operating activities was $305 million, a decrease from $373 million in the prior year, partly due to changes in customer deposits.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2009, Carnival Corp kept $0.09.
- Revenue$2.86B100.0%
- Cost of revenue−$1.85B64.6%
- Gross profit$1.01B35.4%
- Operating costs−$703.0M24.5%
- Operating income$311.0M10.9%
- Interest, other & tax−$51.0M1.8%
- Net income$260.0M9.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2009filed April 2, 2009Financial Statements
| Revenue | $2.86B |
| Cost of Revenue | $1.85B |
| Gross Profit | $1.01B |
| SG&A Expenses | $392.00M |
| Operating Expenses | $2.55B |
| Operating Income | $311.00M |
| Interest Expense | $96.00M |
| Net Income | $260.00M |
| EPS (Basic) | $0.33 |
| EPS (Diluted) | $0.33 |
05—Questions
Frequently Asked Questions
How did the economic downturn and currency fluctuations affect Carnival's revenue?
The economic downturn negatively impacted cruise ticket pricing and onboard spending, while a stronger U.S. dollar against the euro and sterling also reduced reported revenues. This led to a 9.1% decrease in total revenues year-over-year.
What actions is Carnival taking to manage costs during this period?
Carnival implemented significant cost reductions, most notably a 44.6% decrease in fuel cost per metric ton. They also benefited from a stronger U.S. dollar which lowered costs denominated in foreign currencies. Selling and administrative expenses also decreased.
What is the company's outlook for the remainder of 2009, and how has it been updated?
The company updated its EPS guidance for Q2 2009 to a range of $0.30-$0.32 and for the full year 2009 to $2.10-$2.30. The updated guidance reflected a slight decrease of $0.01 for Q2 and $0.06 for the full year compared to prior guidance, driven by updated assumptions for fuel costs and currency exchange rates.
What is the status of Carnival's liquidity and its dividend policy?
Carnival is focused on preserving cash and liquidity. To achieve this, the company suspended its quarterly dividend beginning March 2009, intending to maintain the suspension throughout 2009. They believe their operational cash flow, committed financing facilities, and cash balances are sufficient to fund their 2009 cash requirements.
06—Continue