01—Abstract
Summary
Summary of the 10-Q filed October 1, 2009. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported decreased revenues and net income for the three and nine months ended August 31, 2009, compared to the same periods in 2008.
This decline is primarily attributed to the adverse impact of the economic downturn on cruise ticket pricing and onboard revenues, compounded by a stronger U.S. dollar against the euro and sterling. Despite the revenue challenges, the company managed to reduce operating costs, largely due to lower fuel prices and cost-containment initiatives. The company also maintained a strong liquidity position, with significant cash and cash equivalents and available borrowing capacity.
The company's strategy for navigating the economic climate includes a focus on cash preservation, suspending dividends, and managing debt maturities. The outlook for the fourth quarter of 2009 was cautiously projected with a modest earnings per share guidance.
02—Key points
Key Highlights
- Total revenues for the third quarter of 2009 decreased by 14.0% to $4.1 billion, and for the first nine months by 12.3% to $10.0 billion, compared to the prior year.
- Net income for the third quarter declined to $1.07 billion from $1.33 billion in the prior year, and for the nine months to $1.60 billion from $1.96 billion.
- Operating costs decreased significantly due to lower fuel prices (down 39.2% in Q3 and 41.6% year-to-date per metric ton) and cost containment efforts.
- The company maintained a healthy cash position, with cash and cash equivalents increasing to $976 million at August 31, 2009, up from $650 million at November 30, 2008.
- Liquidity remained strong, with $6.2 billion in available resources, including cash, cash equivalents, and committed credit facilities.
- Carnival repurchased shares through 'Stock Swap' programs, issuing Carnival plc ordinary shares to fund repurchases of Carnival Corporation common stock, and vice versa, to capitalize on pricing differentials.
- The company suspended its quarterly dividend in October 2008 to preserve cash and enhance financial flexibility.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2009, Carnival Corp kept $0.26.
- Revenue$4.14B100.0%
- Cost of revenue−$2.23B53.8%
- Gross profit$1.91B46.2%
- Operating costs−$717.0M17.3%
- Operating income$1.20B28.9%
- Interest, other & tax−$123.0M3.0%
- Net income$1.07B25.9%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2009filed October 1, 2009Financial Statements
Q3 FY2009 against Q3 FY2008
| Line item | Q3 FY2009Q3 FY2008 | Change |
|---|---|---|
| Revenue | $4.14B$4.81B | −14.0% |
| Cost of Revenue | $2.23B$2.63B | −15.5% |
| Gross Profit | $1.91B$2.18B | −12.2% |
| SG&A Expenses | $381.00M$372.00M | +2.4% |
| Operating Expenses | $2.94B$3.33B | −11.6% |
| Operating Income | $1.20B$1.49B | −19.5% |
| Interest Expense | $95.00M$108.00M | −12.0% |
| Net Income | $1.07B$1.33B | −19.5% |
| EPS (Basic) | $1.36$1.70 | −20.0% |
| EPS (Diluted) | $1.33$1.65 | −19.4% |
| Shares Outstanding (Basic) | 787.00M— | — |
| Shares Outstanding (Diluted) | 809.00M— | — |
05—Questions
Frequently Asked Questions
What was the primary reason for the decline in Carnival's revenue for the period?
The primary reason for the decline in revenue was the adverse impact of the economic downturn on cruise ticket pricing and onboard revenues, further exacerbated by a stronger U.S. dollar against the euro and sterling. Additionally, recommendations against travel to Mexico due to H1N1 flu also negatively impacted revenue.
How did Carnival manage to reduce its costs despite increased capacity?
Carnival successfully reduced operating costs primarily due to significantly lower fuel prices per metric ton. Cost containment initiatives and a stronger U.S. dollar against foreign currencies also contributed to cost reductions, offsetting some of the increased expenses related to higher capacity (ALBDs).
What is the company's liquidity position and outlook?
Carnival maintained a strong liquidity position with $6.2 billion available as of August 31, 2009, comprising cash, cash equivalents, and committed credit facilities. The company expects its current liquidity and cash flow from operations to be sufficient for its cash requirements in the fourth quarter of 2009 and into 2010, with no immediate need for additional debt, although they may seek favorable financing opportunities.
Has Carnival resumed paying dividends?
No, Carnival suspended its quarterly dividend starting in March 2009 to preserve cash and enhance financial flexibility. The company stated it would re-evaluate its dividend policy based on its liquidity, business tone, and credit rating but had not resumed dividends by the filing date.
06—Continue