10-QPeriod: Q3 FY2011

CARNIVAL CORP Quarterly Report for Q3 Ended Aug 31, 2011

Filed September 30, 2011For Securities:CCL

Summary

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 billion, 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 million, 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.

Financial Highlights

51 data points
Beta

Net Income

$1.34B

EPS (Diluted)

$1.69

Total Assets

$40.03B

Cash & Equivalents

$430.00M

Free Cash Flow

$402.00M

Financial Statements
Beta
Cost of Revenue$2.81B
SG&A Expenses$421.00M
Operating Expenses$3.63B
Operating Income$1.43B
Interest Expense$96.00M
Net Income$1.34B
EPS (Basic)$1.69
EPS (Diluted)$1.69
Shares Outstanding (Basic)790.00M
Shares Outstanding (Diluted)792.00M

Key Highlights

  • 1Total 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.
  • 2Net income for the quarter was $1.337 billion, up slightly from $1.303 billion in the same period last year.
  • 3Operating income saw a modest increase to $1.433 billion from $1.402 billion.
  • 4Fuel costs significantly increased by $181 million for the quarter compared to the prior year.
  • 5Capacity, measured by Available Lower Berth Days (ALBDs), increased by 4.8% for the quarter.
  • 6The company's balance sheet shows significant investment in Property and Equipment, Net, totaling $33.24 billion at August 31, 2011.
  • 7Customer deposits, a key component of current liabilities, increased to $3.14 billion, indicating strong advance bookings.

Frequently Asked Questions

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.

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.

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.

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.