01—Abstract
Summary
Summary of the 10-Q filed June 30, 2009. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported a decline in revenues and net income for the three and six months ended May 31, 2009, compared to the same periods in 2008.
This downturn is primarily attributed to the adverse impact of the economic recession on consumer spending for cruise tickets and onboard services, as well as a stronger U.S. dollar against the euro and sterling. Despite the revenue challenges, the company managed operating expenses effectively, largely due to lower fuel prices and currency benefits. Net income for the three months ended May 31, 2009, was $264 milliona, or $0.33 per diluted share, down from $390 million, or $0.49 per diluted share, in the prior year.
For the six months, net income was $524 millionb, or $0.66 per diluted share, compared to $626 million, or $0.78 per diluted share, in the prior year. Cash flow from operations remained solid, but was impacted by a decrease in customer deposits due to booking trends. The company continues to invest in its shipbuilding program, with significant capital expenditures.
Carnival has taken steps to preserve cash, including suspending its quarterly dividend and maintaining a strong liquidity position through committed credit facilities. Management anticipates sufficient cash flow and financing to meet its obligations and capital commitments for the foreseeable future.
02—Key points
Key Highlights
- Total revenues decreased by 12.7% for the three months ended May 31, 2009 ($2.9 billion vs. $3.4 billion in 2008) and 11.0% for the six months ended May 31, 2009 ($5.8 billion vs. $6.5 billion in 2008), driven by economic downturn and currency headwinds.
- Net income for the three months ended May 31, 2009, was $264 million ($0.33/share), down from $390 million ($0.49/share) in 2008. For the six months, net income was $524 million ($0.66/share), down from $626 million ($0.78/share) in 2008.
- Operating costs decreased significantly due to lower fuel prices (down 43% per metric ton) and the stronger U.S. dollar, partially offsetting revenue declines.
- The company's capacity, measured in Available Lower Berth Days (ALBDs), increased by 5.9% for the quarter and 4.1% for the six months, reflecting new ship deliveries.
- Net revenue yields (a key performance indicator) decreased significantly on both a reported and constant dollar basis, reflecting weaker pricing power in the challenging economic environment.
- Cash flow from operations for the six months was $1.4 billion, a decrease from $1.8 billion in the prior year, impacted by lower customer deposits.
- Carnival has suspended its quarterly dividend and is focused on preserving cash, with $4.8 billion in liquidity available as of May 31, 2009, including cash, credit facilities, and committed financing.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2009, Carnival Corp kept $0.09.
- Revenue$2.95B100.0%
- Cost of revenue−$1.89B63.9%
- Gross profit$1.06B36.1%
- Operating costs−$710.0M24.1%
- Operating income$353.0M12.0%
- Interest, other & tax−$89.0M3.0%
- Net income$264.0M9.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2009filed June 30, 2009Financial Statements
| Revenue | $2.95B |
| Cost of Revenue | $1.89B |
| Gross Profit | $1.06B |
| SG&A Expenses | $393.00M |
| Operating Expenses | $2.60B |
| Operating Income | $353.00M |
| Interest Expense | $90.00M |
| Net Income | $264.00M |
| EPS (Basic) | $0.34 |
| EPS (Diluted) | $0.33 |
05—Questions
Frequently Asked Questions
What was the primary driver for the decrease in revenue?
The primary driver for the decrease in revenue was the adverse impact of the economic downturn on consumer spending, leading to lower cruise ticket pricing and reduced onboard spending. A stronger U.S. dollar against the euro and sterling also negatively impacted reported revenues.
How did the company manage its costs in light of declining revenues?
Carnival Corporation & plc effectively managed its costs, primarily through a significant reduction in fuel expenses due to lower fuel prices and the company's fuel-saving initiatives. The stronger U.S. dollar also provided a benefit by reducing the cost of euro and sterling-denominated expenses when translated into U.S. dollars. Selling and administrative expenses also decreased.
What is the company's outlook for the remainder of fiscal 2009, and what measures are being taken to ensure financial stability?
For the remainder of fiscal 2009, the company had previously provided guidance for diluted earnings per share between $1.15 to $1.19 for the third quarter and $2.00 to $2.10 for the full year. To ensure financial stability amidst challenging economic conditions, Carnival has suspended its quarterly dividend, is preserving cash, and maintains a strong liquidity position with over $4.8 billion in available funds and committed financing, which is expected to be sufficient to fund its operational needs and capital expenditures.
How did fuel costs impact the company's results?
Fuel costs had a significant positive impact on the company's results. The average fuel cost per metric ton decreased by approximately 43% in the first six months of 2009 compared to 2008, contributing to substantial savings in operating expenses and a decrease in net cruise costs per ALBD.
06—Continue