01—Abstract
Summary
Summary of the 10-Q filed June 30, 2017. Cited figures are marked; the original filing is the authoritative source.
Carnival Corporation & plc reported solid financial performance for the six months ended May 31, 2017.
Total revenues increased by 6.0% to $6.4 billiona, driven by a 3.7% increase in capacity (ALBDs) and a 4.4% rise in constant currency net revenue yields. This growth was primarily fueled by strong performance in the North America segment, with notable price improvements in key itineraries like the Caribbean, Europe, and Alaska, as well as higher onboard spending. Despite an increase in operating costs and expenses, largely due to higher fuel prices and capacity expansion, the company managed to improve its operating income in the North America segment.
However, the EAA segment experienced a decline in operating income due to foreign currency impacts and weaker performance in China. The company maintained a strong liquidity position with $11.9 billionb available, providing confidence in funding future capital expenditures, including new ship deliveries. Investors should note the ongoing capacity expansion and the impact of fuel prices and currency fluctuations on profitability.
02—Key points
Key Highlights
- Total revenues for the six months ended May 31, 2017, increased by 6.0% to $6.4 billion, compared to $6.0 billion in the prior year period.
- Net revenue yields increased by 2.2% (4.5% on a constant currency basis) to $157.21, driven by higher passenger ticket prices and onboard spending.
- Capacity, measured in Available Lower Berth Days (ALBDs), increased by 3.7% to 40.4 million, reflecting new ship deliveries.
- Operating costs and expenses rose by 8.2% to $4.9 billion, significantly impacted by a $218 million increase in fuel costs.
- Net income for the six months decreased slightly to $730 million from $747 million in the prior year, impacted by higher operating costs and fuel prices.
- The company maintained a strong liquidity position with $11.9 billion available at May 31, 2017, to fund ongoing operations and capital expenditures, including shipbuilding commitments.
- Dividends declared per share increased to $0.40 for the three months ended May 31, 2017, from $0.35 in the prior year, indicating a commitment to returning capital to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2017, Carnival Corp kept $0.10.
- Revenue$3.94B100.0%
- Cost of revenue−$2.44B61.7%
- Gross profit$1.51B38.3%
- Operating costs−$1.01B25.6%
- Operating income$500.0M12.7%
- Interest, other & tax−$121.0M3.1%
- Net income$379.0M9.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2017filed June 30, 2017Financial Statements
Q2 FY2017 against Q2 FY2016
| Line item | Q2 FY2017Q2 FY2016 | Change |
|---|---|---|
| Revenue | $3.94B$3.71B | +6.5% |
| Cost of Revenue | $2.44B$2.26B | +7.9% |
| Gross Profit | $1.51B$1.45B | +4.3% |
| SG&A Expenses | $553.00M$532.00M | +3.9% |
| Operating Expenses | $3.44B$3.23B | +6.8% |
| Operating Income | $500.00M$478.00M | +4.6% |
| Interest Expense | $50.00M$57.00M | −12.3% |
| Net Income | $379.00M$605.00M | −37.4% |
| EPS (Basic) | $0.52$0.81 | −35.8% |
| EPS (Diluted) | $0.52$0.80 | −35.0% |
| Shares Outstanding (Basic) | 724.00M751.00M | −3.6% |
| Shares Outstanding (Diluted) | 727.00M753.00M | −3.5% |
05—Questions
Frequently Asked Questions
What drove the revenue growth in the six months ended May 31, 2017?
Revenue growth was primarily driven by a 3.7% increase in capacity (Available Lower Berth Days) and a 4.4% increase in constant currency net revenue yields. This was supported by price improvements in key itineraries and increased onboard spending by guests.
How did fuel prices affect the company's profitability?
Fuel costs significantly increased by $218 million for the six months ended May 31, 2017, compared to the prior year. This higher fuel expense was a major factor in the increase in operating costs and expenses and contributed to the slight decrease in net income.
What is the company's liquidity situation and outlook?
Carnival Corporation & plc maintained a strong liquidity position with $11.9 billion available at May 31, 2017. This includes cash, available credit facilities, and committed future financings, which are expected to be sufficient to fund anticipated capital expenditures, including its shipbuilding program, over the next several years.
How does the company manage foreign currency risks?
The company manages foreign currency exposure through its operations and financing activities, and by using derivative instruments when appropriate. Fluctuations in exchange rates, particularly the U.S. dollar against foreign currencies like the Euro, can impact reported revenues and expenses, especially for its EAA segment.
06—Continue