Carnival Company has reported internet earnings of $187.0 million, or $0.32 per share, on revenues of $1.08 billion for its second quarter ended Could 31, 2001, in comparison with internet earnings of $204.0 million, or $0.34 per share, on revenues of $875.1 million for the second quarter of 2000.
Carnival’s second-quarter numbers in 2001 embody outcomes for Costa Crociere, whose efficiency was beforehand accounted for underneath affiliated operations. Excluding Costa, Carnival reported a rise in working earnings of 14.3 p.c in comparison with the second quarter of 2000, a rise in internet income yields of 1.8 p.c, progress in revenues of 8.9 p.c, and an increase in internet per diems of 1.1 p.c. In keeping with Carnival Chairman and CEO Micky Arison, “Despite the persevering with weak financial surroundings, we had been nonetheless capable of obtain robust progress within the working earnings of our cruise manufacturers. A mixture of an 8.4 p.c improve in capability, a 1.8 p.c improve in internet income yields, and decrease working price per obtainable berth day helped to drive the expansion.”
Particularly, Carnival executives careworn the significance of their 2001 cost-cutting technique, which resulted in a drop in working expense per obtainable berth of two.4 p.c (excluding Costa) within the second quarter.
For the six months ended Could 31, 2001, Carnival reported internet earnings of $314.9 million, or $0.54 per share, on revenues of $2.09 billion, in comparison with internet earnings of $375.5 million, or $0.61 per share, on revenues of $1.7 billion for the primary six months of 2000.
Trying ahead to the second half of this yr, Arison predicted internet income yields will drop roughly two to a few p.c (versus the sooner prediction of 1 to 2 p.c), because of the slowing financial system and pressures on cruise pricing. But he additionally famous that Carnival doesn’t take a look at every thing solely when it comes to yields, but additionally profitability. “It’s necessary to notice that each the Seabourn Solar’s switch to Holland America Line (HAL) and the Westerdam’s transfer to Costa will decrease yields – however they’re meant to extend profitability, not improve yields.”
Second-quarter 2001 internet earnings included elevated losses of $11.3 million in comparison with 2000 from the corporate’s Airtours funding, which was lately offered. As well as, final yr’s second quarter outcomes included non-recurring internet positive aspects of $10.7 million from affiliated operations, and $6.6 million of internet compensation associated to the late supply o f the Zaandam.
Unique of those varied elements, Carnival CFO Gerald Cahill defined, “It was the very best quarter we’ve had within the final yr.” Carnival execs mentioned Caribbean and European cruises had been performing properly, with “Alaska a bit softer.” The Carnival Cruise Strains model carried out greatest, adopted by HAL, with luxurious strains Seabourn Cruise Strains and Cunard Line persevering with to wrestle. Arison defined that in difficult financial instances “individuals will commerce down, so as an alternative of taking a Seabourn cruise, they’ll resolve to take a Holland America or Carnival cruise this yr.”
“On the Cunard/Seabourn scenario,” continued Carnival COO Howard Frank, “we now have reorganized and are within the technique of re-engineering the manufacturers. We’re hopeful we are going to see a constructive influence on these manufacturers’ efficiency in 2002.” He added, “It is vitally tough to get respectable returns on Seabourn, even underneath the brand new construction, however when it comes to the dimensions of our general enterprise, it’s a peanut. What we’re actually attempting to do is neutralize it so it doesn’t have a detrimental influence.” Requested whether or not it is smart for Carnival to proceed to carry onto the model, Frank responded, “It does, however we proceed to have a look at different strategic alternate options.”
Carnival executives additionally addressed the topic of the $1.08 billion in new money on band as the results of its issuance of convertible senior debentures and the sale of the corporate’s Airtours stake. Stated Frank, “The proceeds at present sit in our treasury and there actually aren’t any rapid plans for using these funds. We don’t consider it’s uncommon for a corporation of our dimension to have that degree of funds obtainable in its treasury. It’s a good security worth and good to have readily available if a possible funding ought to come up. There have been quite a lot of rumors that we’re just about each firm within the cruise trade, and there’s no fact to that.”
Carnival executives made reference to 4 unnamed firms that they believed had been now confronting critical monetary issue, referring to them as firms with poorly designed ships, extremely leveraged balanced sheets, backed ship financing, a scarcity of FMC bonding as a result of their vessels don’t name in U.S. ports, and/or latest layoffs – seemingly in reference to Renaissance Cruises, American Basic Voyages, and two different manufacturers.
“With poorly designed ships, we don’t suppose we might do any higher than they (the present homeowners) are,” mentioned Frank, including, “If someone runs into issues, everyone thinks we’re going to purchase them.” As Arisen put it, “We’re not going to bail out these firms,” noting that the closure of the businesses in query, if it occurred, would have higher ramifications than the sooner closures of Commodore cruise Line and Premier Cruise Strains.
Regardless of such feedback, nonetheless, Frank conceded, “We don’t imply to say that we gained’t take a look at different alternatives (sooner or later).”
Requested about any future curiosity within the Asian cruise market, Arisen mentioned, “The truth that Star Cruises is shifting all of its newbuildings from the Asian market to the U.S. market tells you what the scenario is in Asia.”
However Carnival continues to be bullish on the European entrance. “Costa is performing together with expectations, though they’re starting to see a little bit weakening of the markets in Europe,” mentioned Frank. Carnival confirmed that the Costa Riviera shall be offered or retired when the Westerdam is transferred into the Costa fleet in 2002.
Following the announcement of Carnival’s second-quarter outcomes, which beat consensus analyst expectations by $0.02, main cruise shares rose. Consensus analyst predictions of $1.65 for the total yr had been confirmed by Carnival, with Frank calling the determine “fairly affordable and achievable.”
Commercial. Scroll to proceed studying.
