8-KOther Events

CARNIVAL CORP 8-K Report (Jun 20, 2002)

Filed June 20, 2002For Securities:CCL

Summary

Carnival Corporation reported its second quarter 2002 earnings, highlighting a modest increase in net income to $194.2 million ($0.33 Diluted EPS) from $187.0 million ($0.32 Diluted EPS) in the prior year, despite a 8.3% decrease in revenues to $989.2 million from $1.08 billion. This revenue decline was primarily attributed to lower cruise ticket prices following the September 11th events and a reduction in air transportation purchases by guests, although partially offset by a 2.1% increase in cruise capacity. The company's performance showed sequential improvement from the first quarter, with net revenue yields narrowing their decline. Despite the revenue challenges, Carnival Corporation emphasized its successful cost containment initiatives, which helped reduce costs per available berth day. The company also noted strong booking levels during the second quarter, which have since stabilized and are approaching prior-year levels. Management expressed optimism about the continued recovery of the cruise business, projecting sequential yield improvement for the remainder of 2002, with expectations for a slight increase in yields in the fourth quarter. Additionally, the company provided updates on its fleet expansion, including the exercise of an option for a new Vista-class ship and the upcoming launches of the Carnival Legend and Carnival Conquest, as well as the Holland America Zuiderdam.

Key Highlights

  • 1Second quarter 2002 net income increased to $194.2 million ($0.33 Diluted EPS) compared to $187.0 million ($0.32 Diluted EPS) in Q2 2001.
  • 2Second quarter 2002 revenues decreased by 8.3% to $989.2 million, primarily due to lower cruise ticket prices and reduced air transportation sales, impacted by the events of September 11th.
  • 3Net revenue yield decreased by 5.3% in Q2 2002, though this represented an improvement from the 7.5% decline in Q1 2002.
  • 4Cost containment initiatives resulted in a 5.7% reduction in cost per available berth day.
  • 5Booking levels in Q2 2002 were substantially ahead of the prior year, and recent booking levels are approximately equal to last year.
  • 6The company expects sequential yield improvement for the remainder of 2002, with net revenue yields projected to be down 3-5% in Q3 and up slightly in Q4.
  • 7Carnival Corporation announced plans to introduce three new ships: Carnival Legend (August 2002), Carnival Conquest (November 2002), and Holland America's Zuiderdam (December 2002), and exercised an option for a fifth Vista-class ship for spring 2006 delivery.

Frequently Asked Questions

The revenue decline of 8.3% to $989.2 million was primarily attributed to lower cruise ticket prices, largely a consequence of the events of September 11th, and a significant decrease in the number of guests purchasing air transportation from the company. This was partially offset by an increase in cruise capacity of 2.1%.

Carnival Corporation implemented cost containment initiatives which resulted in a 5.7% reduction in the company's cost per available berth day (excluding air transportation and travel agent commissions). This helped to mitigate the pressure on net revenue yields.

The company reported that booking levels during the second quarter were substantially ahead of the prior year, and recent booking levels are approximately equal to last year's. Based on current bookings, Carnival expects the trend of sequential yield improvement to continue through the rest of 2002, with net revenue yields projected to be down 3% to 5% in the third quarter and up slightly in the fourth quarter.

Yes, Carnival Corporation is expanding its fleet. The Carnival Legend is set to launch in August 2002 with European cruises, followed by the Carnival Conquest in mid-November 2002 from New Orleans. Holland America's Zuiderdam will enter service in December 2002. Additionally, Holland America exercised an option for a fifth Vista-class ship, scheduled for delivery in spring 2006.