10-QPeriod: Q1 FY2012

CARNIVAL CORP Quarterly Report for Q1 Ended Feb 29, 2012

Filed March 30, 2012For Securities:CCL

Summary

Carnival Corporation & plc reported a net loss of $139 million for the three months ended February 29, 2012, a significant shift from a net income of $152 million in the prior year period. This downturn was heavily influenced by a $173 million goodwill and trademark impairment charge related to its Ibero Cruises brand, along with $34 million in impairment for the Costa Allegra and $29 million in incident-related expenses for the Costa Concordia, none of which were fully offset by insurance. Despite the net loss, consolidated revenues saw a modest increase of 4.2% to $3.58 billion, driven by higher passenger ticket and onboard spending, coupled with a 3.7% capacity increase. However, operating costs and expenses surged by 12.5% due to rising fuel prices ($137 million increase) and the aforementioned charges. The company is navigating the aftermath of the Costa Concordia incident, which has impacted booking volumes and pricing, particularly for its European brands, although management believes the long-term impact will not be significant. The company maintains a strong liquidity position with $6.6 billion in available liquidity.

Financial Highlights

49 data points
Beta

Net Income

-$139.00M

EPS (Diluted)

$-0.18

Total Assets

$38.96B

Cash & Equivalents

$471.00M

Free Cash Flow

$55.00M

Financial Statements
Beta
Cost of Revenue$2.69B
SG&A Expenses$421.00M
Operating Expenses$3.66B
Operating Income-$82.00M
Interest Expense$88.00M
Net Income-$139.00M
EPS (Basic)$-0.18
EPS (Diluted)$-0.18
Shares Outstanding (Basic)778.00M
Shares Outstanding (Diluted)778.00M

Key Highlights

  • 1Reported a net loss of $139 million for the quarter, compared to a net income of $152 million in the prior year.
  • 2Consolidated revenues increased by 4.2% to $3.58 billion, driven by a 3.7% capacity increase and higher ticket and onboard spending.
  • 3Operating costs and expenses rose significantly by 12.5% to $3.66 billion, largely due to a $173 million goodwill and trademark impairment for Ibero Cruises, higher fuel costs ($137 million increase), and other incident-related charges.
  • 4The Costa Concordia incident negatively impacted fleetwide booking volumes and pricing, especially for European brands, although the company expects no significant long-term impact.
  • 5Maintained a strong liquidity position with $6.6 billion in cash and available borrowing capacity as of February 29, 2012.
  • 6Dividends declared per share remained stable at $0.25 for the quarter.

Frequently Asked Questions

The primary driver for the net loss of $139 million in the current quarter, compared to a net income of $152 million in the prior year, was a substantial $173 million goodwill and trademark impairment charge related to the Ibero Cruises brand. Additionally, the company incurred impairment charges for the Costa Allegra and recognized expenses related to the Costa Concordia incident that were not fully covered by insurance.

The Costa Concordia accident has negatively impacted fleetwide booking volumes and pricing, particularly for the European brands, leading to a decline in bookings and lower prices compared to the prior year. While the company incurred direct costs and impairments related to the incident, management believes that the accident will not have a significant long-term impact on the business. The company also carries insurance for certain third-party claims.

Carnival Corporation & plc reported strong liquidity with $6.6 billion available as of February 29, 2012, comprising cash and cash equivalents, available under revolving credit facilities, and committed ship financings. The company believes its existing liquidity and projected cash flow from operations will be sufficient to fund its capital projects, debt service, working capital needs, and dividends over the next several years.

Higher fuel prices significantly impacted operating costs, increasing by $137 million compared to the prior year period. This contributed to the overall rise in operating expenses and a wider net loss.