8-KOther Events

CARNIVAL CORP 8-K Report (Jun 17, 2004)

Filed June 17, 2004For Securities:CCL

Summary

Carnival Corporation & plc reported record second quarter and first half earnings for the period ending May 31, 2004. The company achieved net income of $332 million, or $0.41 diluted EPS, on revenues of $2.3 billion for the second quarter, a significant increase compared to the pro forma $124 million net income, or $0.16 diluted EPS, on $1.6 billion in revenue for the same period in 2003. This performance was driven by strong increases in net revenue yields, up 13.2% on a pro forma basis, attributed to higher per-diem revenues, increased occupancy, and a weaker U.S. dollar. Despite a 22% capacity increase and currency headwinds, net cruise costs per available lower berth day remained flat on a pro forma basis, reflecting effective cost management and merger synergies. The company also announced an optimistic outlook for the remainder of 2004, with advance booking levels significantly ahead of the prior year and continued pricing strength. Carnival raised its full-year 2004 earnings per share guidance to a range of $2.10 to $2.20, up from its previous forecast. This positive outlook is supported by the successful integration of P&O Princess, the smooth introduction of seven new ships in seven months, and the growing popularity of cruising as a vacation choice.

Key Highlights

  • 1Record second quarter net income of $332 million, or $0.41 diluted EPS, on $2.3 billion in revenue.
  • 2Pro forma net income for Q2 2004 more than doubled compared to Q2 2003 ($332M vs. $124M).
  • 3Net revenue yields increased by 13.2% year-over-year on a pro forma basis, driven by higher pricing and occupancy.
  • 4Net cruise costs per available lower berth day were flat year-over-year on a pro forma basis, indicating effective cost control and merger synergies.
  • 5Carnival raised its full-year 2004 EPS guidance to $2.10-$2.20, an increase from previous expectations.
  • 6The company successfully integrated the P&O Princess acquisition and launched seven new ships within a seven-month period.
  • 7Advance booking levels for the second half of 2004 are significantly ahead of the prior year, with strong pricing.

Frequently Asked Questions

The 'pro forma' financial data is used to compare the current period's results (Q2 2004) with the prior year's results (Q2 2003) as if the Dual Listed Company (DLC) transaction, which combined Carnival Corporation and P&O Princess plc, had occurred at the beginning of the prior year. This provides a more meaningful comparison of operational performance and financial metrics since the reported 2003 results only included P&O Princess's operations for a portion of the year after the transaction on April 17, 2003.

The record second quarter earnings were driven by several key factors: a substantial increase in net revenue yields (up 13.2% pro forma), attributed to higher daily guest spending, improved occupancy rates, and favorable currency exchange rates (weaker U.S. dollar against the euro and sterling). Additionally, the company achieved flat net cruise costs per available lower berth day on a pro forma basis, demonstrating effective cost management and realizing synergies from the P&O Princess combination.

Carnival has a strong positive outlook for the remainder of 2004. Advance bookings are significantly ahead of last year, and pricing remains strong. The company has raised its full-year earnings per share guidance to $2.10-$2.20, reflecting better-than-expected second quarter results and continued favorable market conditions. The successful integration of new ships and the growing popularity of cruising are key drivers of this optimism.

The weak U.S. dollar has a mixed impact. On the positive side, it boosts reported revenue yields when translated into U.S. dollars, as European and British passengers' spending in their local currencies is worth more. However, it also increases reported cruise costs for expenses incurred in foreign currencies. The company noted that while the weak dollar increased cruise costs per ALBD, cost efficiencies and economies of scale helped keep net cruise costs per ALBD flat on a constant dollar basis.