Carnival Reports Full 2004 Results

Carnival Corporation has reported what it called “the best year in its history” with net income of $1.85 billion, or $2.24 per share, on revenues of $9.73 billion for its fiscal year ended Nov. 30, 2004, compared to net income of $1.19 billion, or $1.63 per share, on revenues of $6.72 billion for its year ended Nov. 30, 2003. 

Carnival reported net income of $294 million, or $0.36 per share on revenues of $2.24 billion for its fourth quarter ended Nov. 30, 2004, compared to net income of $205 million, or $0.26 per share, on revenues of $1.82 billion for the same the same quarter last year. 

Looking forward, Carnival Chairman and CEO Micky Arison said that the company is entering 2005 with a significant head start over 2004. “Even with an expected 9 percent capacity increase in 2005, we have less inventory to sell now than this time last year.” 

He added that advance booking levels are significantly ahead of the prior year’s levels, with pricing slightly higher than last year.

Carnival expects that net revenue yields for 2005 will increase approximately 3 percent to 5 percent compared to last year and is comfortable with earnings estimates of $2.70 per share.

Said Arison: “The reason yield is up is that demand is up.”

With a bigger contribution from onboard revenue, Gary Cahill, executive vice president and CFO, said that onboard revenue has historically grown at an annual rate of about 3 percent until last year, when the company benefited from synergies gained from P&O PRrincess Cruises and said he expects onboard revenue to grow above the traditional 3 percent in 2005 before settling back. 

As for Carnival’s plans for Asia, Arison said that he expects to comment on its strategy in the first half of next year. 

“There are opportunities created by the merger that have become possible that we were not aware of initially,” Arison explained, noting that the merger has brought a new scale to the table and global knowledge. “We are (now) looking at our global assets differently than we did two to three years ago,” he added. “The opportunities are far greater than we envisioned when we started this thing (merger).” 

While Arison said that venturing into Asia did not necessarily mean new ships, he did say that the company is continuing to talk to Mitsubishi, but that the shipbuilder is very busy with a huge demand for container vessels. 

With the dollar-euro relationship, Arison said that orders for dollar-based brands have become even more difficult, but that notwithstanding Carnival is continuing to develop the Pinnacle Project. “I do not envision anything happening soon,” he added. “The closest you will see a new ship in practical terms is 2009.” 

Cahill pointed out higher advertising costs in Q4 04 which he attnbuted to efforts to jump-start business for 05 for all the brands. 

Commented Howard Frank, vice chairman and COO, ”North American profits were up 30 percent year-over-year, but European profits more than doubled. This is one of the reasons we believe Europe has excellent potential to grow our business and profits in the future.” 

For 05, the group as a whole will see a 9 percent capacity increase – with 8 percent in North America and 10 percent in Europe.

According to Frank, fleetwide bookings were 7.5 points ahead of last year for Q1 with a 16 percent capacity increase; 11 points ahead for Q2 with a 6.9 percent capacity increase; and 9 percent ahead for Q3 with a 5.7 percent capacity increase. “Alaska and Europe are very, very strong,” he said. 

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