Carnival Cruise Lines has reported net income of $43.4 million ($0.32 EPS) on revenues of $345.6 million in the second quarter ended May 31, 1991, compared to net income of $54.6 million ($0.41 EPS) on revenues of $352.5 million for the same quarter in 1990.
According to Carnival, the decrease in revenues and net income was attributable to softer pricing and reduced passenger load levels in the second quarter caused by a significant falloff in advanced bookings resulting from the outbreak of the Mideast War in the prior quarter.
Mickey Arison, Chairman and CEO, said that in order to stimulate passenger bookings during the prior quarter the cruise line offered significant price promotions and discounts which caused higher than normal dilution during the second quarter.
Contributing to the $0.32 earnings per share in the second quarter was the nearly flat Selling, General and Administrative costs for the quarter compared to last year’s, whereby Carnival has been able to cut costs; and the extraordinary gain of $0.02 resulting from Carnival’s sale of its stake in Masa Yards.
Yields were off by four percent in the second quarter following a slow decline since the second quarter of 1990.
Arison also said that, “although it was a difficult quarter, we were extremely pleased with our performance given the conditions under which we operated.”
Net income for the six month period ended May 31, 1991, was $73.9 million ($0.55 EPS) on revenues of $673.9 million, compared to net income of $79.8 million ($0.59 EPS) on revenues of $611.9 million for the same period last year.
For its second quarter, Carnival achieved an average occupancy level of 103.4 percent carrying 262,736 passengers, compared to 257,443 passengers for an average occupancy level of 106.6 percent in the second quarter of 1990.
Passenger counts for the six months rose 21 percent to 509,146 up from 422,474 passengers in the first half of 1990. The increase in passengers occurred principally in the first quarter which reflected increased cruise ship capacity compared to the first quarter of 1990.
With the Ecstasy entering service in the third quarter of Carnival’s fiscal year, cruise ship capacity will increase approximately 13 percent.
Carnival is expected to post stronger results for its third and fourth quarters, particularly with the contribution of Holland America Line in its third quarter, ending August 31. HAL will also be contributing to Carnival’s fourth fiscal quarter, although this quarter will also be more affected by the situation in the Caribbean, the company’s main market.
While Carnival has fared better than any of the other cruise lines and out-performed much of the stock market, it is able to post its present earnings also because of postponement of previously scheduled debt payments; cost cutting; and by extraordinary gains. In a prepared statement, Arison conceded that Carnival is also sensitive to events, and it would seem increasingly so, as the cruise line grows in size.
According to documents filed with the Securities and Exchange Commission in conjunction with its imminent public offering, starting in its first 1991 fiscal quarter, Carnival has also seen increasing operating costs due to higher airfare, fuel and payroll. lt stated that cruise operating costs have increased at a more rapid rate than cruise revenues thus causing a reduction in cruise margins.
Its first 1992 fiscal quarter, December 1, 1991 through February 1992, will provide a better indicator of when Carnival is back on its earnings track.