10-QPeriod: Q1 FY2009

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 28, 2009

Filed April 2, 2009For Securities:CCL

Summary

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 million 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.

Financial Highlights

27 data points
Beta

Revenue

$2.86B

35.4% Gross Margin

Net Income

$260.00M

9.1% Net Margin

EPS (Diluted)

$0.33

Cash & Equivalents

$607.00M

Free Cash Flow

-$1.00M

Financial Statements
Beta
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

Key Highlights

  • 1Net income increased to $260 million, up from $236 million in the prior year's first quarter.
  • 2Diluted Earnings Per Share (EPS) improved to $0.33, compared to $0.30 in the same period last year.
  • 3Total 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.
  • 4Operating income remained stable at $311 million, as cost reductions offset revenue declines.
  • 5Significant 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.
  • 6The company suspended its quarterly dividend starting in March 2009 to preserve cash and enhance financial flexibility.
  • 7Net cash provided by operating activities was $305 million, a decrease from $373 million in the prior year, partly due to changes in customer deposits.

Frequently Asked Questions

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.

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.

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.

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.