01—Abstract
Summary
Summary of the 10-Q filed September 30, 2011. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc's third quarter 2011 report shows revenue growth driven by capacity increases and a weaker U.S. dollar, though operating income remained relatively flat year-over-year.
Total revenues for the three months ended August 31, 2011, increased by 12.3% to $5.06 billiona, primarily due to a 4.8% increase in available lower berth days (ALBDs) and favorable currency exchange rates. Net income for the quarter was $1.337 billion, a slight increase from $1.303 billion in the prior year. Despite the revenue growth, operating income was $1.433 billion, up slightly from $1.402 billion in the same period last year.
This was impacted by a significant increase in fuel costs, which rose by $181 millionb, and a 4.8% increase in capacity leading to higher operating expenses. The company continues to invest in its fleet, with significant capital expenditures on new shipbuilding projects. While the overall financial performance shows resilience, investors should note the rising fuel costs and the ongoing investment in fleet expansion as key factors influencing profitability.
02—Key points
Key Highlights
- Total revenues for the three months ended August 31, 2011, increased to $5.06 billion from $4.53 billion in the prior year, a 12.3% rise.
- Net income for the quarter was $1.337 billion, up slightly from $1.303 billion in the same period last year.
- Operating income saw a modest increase to $1.433 billion from $1.402 billion.
- Fuel costs significantly increased by $181 million for the quarter compared to the prior year.
- Capacity, measured by Available Lower Berth Days (ALBDs), increased by 4.8% for the quarter.
- The company's balance sheet shows significant investment in Property and Equipment, Net, totaling $33.24 billion at August 31, 2011.
- Customer deposits, a key component of current liabilities, increased to $3.14 billion, indicating strong advance bookings.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2011filed September 30, 2011Financial Statements
Q3 FY2011 against Q3 FY2010
| Line item | Q3 FY2011Q3 FY2010 | Change |
|---|---|---|
| Cost of Revenue | $2.81B$2.39B | +17.8% |
| SG&A Expenses | $421.00M$381.00M | +10.5% |
| Operating Expenses | $3.63B$3.13B | +16.0% |
| Operating Income | $1.43B$1.40B | +2.2% |
| Interest Expense | $96.00M$90.00M | +6.7% |
| Net Income | $1.34B$1.30B | +2.6% |
| EPS (Basic) | $1.69$1.65 | +2.4% |
| EPS (Diluted) | $1.69$1.62 | +4.3% |
| Shares Outstanding (Basic) | 790.00M789.00M | +0.1% |
| Shares Outstanding (Diluted) | 792.00M806.00M | −1.7% |
05—Questions
Frequently Asked Questions
What was the primary driver for the increase in revenue during the third quarter of 2011?
The primary drivers for the revenue increase were a 4.8% increase in capacity (measured by Available Lower Berth Days) and a weaker U.S. dollar against foreign currencies like the euro, sterling, and Australian dollar, which positively impacted reported revenues. Higher cruise ticket pricing also contributed to the revenue growth.
How did the increase in fuel costs affect the company's profitability?
Fuel costs increased significantly by $181 million for the three months ended August 31, 2011, compared to the prior year. This substantial increase in operating expenses partially offset the revenue growth, impacting overall profitability. While revenues increased, the higher cost of fuel put pressure on operating income.
What is the company's outlook for capacity growth in the coming years?
The company expects capacity growth to moderate. The year-over-year increase in ALBD capacity for the 2011 fourth quarter was expected to be 5.8%. For the full fiscal years, capacity growth was projected at 5.2% for 2011, 4.5% for 2012, 3.2% for 2013, and 2.4% for 2014, reflecting a planned slowdown in new ship deliveries.
How does the company manage its financial risk related to foreign currency fluctuations?
Carnival Corporation & plc manages foreign currency exposure through a combination of operating activities and financial instruments. They denominate a portion of their debt in foreign currencies, often in euros or sterling, to hedge their net investments in foreign operations. They also utilize derivative instruments like foreign currency forwards and swaps to manage transactional and translation risks, though they do not hedge for accounting risks.
06—Continue