Carnival Corporation’s earnings guidance for 2009 is from $2.25 to $2. 75 per share, compared to actual earnings of $2.90 for 2008 and $2.95 for 2007. On the company’s fourth quarter and year-end earnings call last December, Vice Chairman and COO Howard Frank said that the slowdown is continuing. “We have taken prices lower, but have seen little result for spring and summer,” he said. “Consumers are booking for next month. The shorter cruises are performing much better than the longer and more exotic programs.”

At the time, he said that European brands’ bookings were holding up considerably better than those of the U.S. brands, which be attributed to European consumers having less debt, being better savers and having more vacation time.

Fleetwide, Carnival’s capacity will be up 5.5 percent in 2009: 8 percent in Europe and 4 percent in North America.

Q1 09

Both bookings and pricing for the first quarter are running behind last year, according to Frank.

Fleet capacity will be up 2.6 percent, 1.9 percent in North America and 7 percent in Europe.

The North American brands will have 62 percent of their capacity in the Caribbean, compared to 61 percent last year; 12 percent on the Mexican Riviera, compared to 15 percent last year; and the balance in various other trades.

European brands will have 32 percent of their capacity in the Caribbean, compared to 3 7 percent last year; 24 percent in Europe, compared to 22 percent last year; 12 percent in Asia, compared to 10 percent last year; 12 percent on world cruises. the same as last year; and 11 percent in South America, compared to 10 percent last year.

Carnival’s guidance for QI is from $0.20 to $0.22 per share, compared to actual earnings of $0.30 for Q1 of 08.

Q2 09

For Q2, fleetwide capacity will be up 6.1 percent – 4.4 percent for the North American brands and 8 percent for the European brands.

Pricing and occupancy were running behind last year, according lo Frank.

The North American brands will have 54 percent of their capacity in the Caribbean, compared to 53 percent last year; and IO percent on the Mexican Riviera, compared to 13 percent last year.

The European brands will have 59 percent of their capacity in Europe, the same as last year; 11 percent in the Caribbean, compared to 16 percent last year; and 11 percent trans-Atlantic.

While Caribbean pricing is running behind last year, with flat occupancy, pricing elsewhere is better, Frank said, but occupancy is lower.

Q3 09

For Q3, the overall capacity will be up 5.6 percent: 3.8 percent in North America and 7.4 percent in Europe, while occupancy and pricing are significantly behind last year, according lo Frank.

The North American brands will have 36 percent of their capacity in the Caribbean, the same as last year; 28 percent in Alaska, slightly less than last year; and 19 percent in Europe, compared to 22 percent last year.

Occupancy was down for the Caribbean with pricing flat, Frank said. Both occupancy and pricing were significantly lower for Alaska and Europe.

The European brands will have 96 percent of their capacity in Europe. Pricing is ahead, Frank said, but occupancy is significantly behind last year.

At this time, the third quarter is looking quite challenging, Frank said in mid-December.

Frank said that Continental Europe seemed to be performing better, that Spain was still a problem, and that the UK was not doing as well as Continental Europe, but better than the U.S.

Mitigating the growth rate in Europe somewhat will be the transfer of the two Ocean Village ships to P&O Australia; one more Costa Crociere ship moving to Asia; and the delayed transfer of another ship to Iberocruceros.

Opportunities

In related comments, Carnival Chairman and CEO Micky Arison hinted at opportunities. He said that there were a number of companies that failed after 9/11.

While he would not say he was interested in any particular acquisitions of companies or ships, he said it was important to be “aware that stuff may happen again.”

“We have to remain diligent about opportunities that may come our way,” he said.

Both Arison and Frank refused to comment on how much capacity may be at risk and what lines could go under.

As for building more ships, Arison said it is unlikely that contracts will be signed under the present (economic) circumstances “unless we can get the return we expect, but that is doubtful. We’ll see.”

There are brands in Carnival’s portfolio that can use capacity, Princess (Cruises), for example, Arison said. “But not unless the environment is such that we can get a good return.”

Added David Bernstein, executive vice president and CFO: “There is still time to order more new ships for 2012.”

“These (the ships) are 30-year assets,” commented Arison. “We can order for 2012, 2013 or 2014 or wait.”

Al the moment the Carnival brands will see 4 percent passenger capacity growth in 2012, when the last new ships will be delivered, and some additional growth in 2013, when the ships will sail for the full year. But after that the overall capacity growth stops.

Level of Uncertainty

Carnival said its earnings guidance reflected its concerns for consumers in 2009. “We hope for a bounce-back and we are hopeful for a reasonable Wave Period,” Arison said.

The $0.50 range in the guidance for 2009 reflects the level of uncertainty, according to Bernstein. “We have been cost-efficient and operated with high margins from day one,” Arison said. “We do not expect to make any drastic cuts and the economics of laying up ships don’t work.” And he will “absolutely not” cut agents’ commissions, he said.

Merging brands is also not considered an option at this point. “When you have unique brands with different cultures, operating in different markets, you run a huge risk by bringing these under the same roof,” said Frank.

“We deliver,” said Arison. “We outperform all other areas of the leisure industry. Sometimes you have to look back to have confidence for the future,” he added.

In the present market, contemporary, relative low-priced products are performing best, according to Ari son.

2008

For its fiscal year ended Nov. 30, 2008, Carnival reported net income of $2.3 billion, or $2.90 per share, on revenues of $14.6 billion, compared to net income of $2.4 billion, or $2.95 per share, on revenues of $13.0 billion for 2007.

Arison commented that the results were affected by higher fuel prices, which cost the company $626 million more than in 2007. He attributed the 2008 result to cost controls and a 2.4 percent revenue yield improvement.

The average ticket price was $ I 79. 93 per passenger day in 2008, compared to $171.30 in 2007.

Onboard and so-called “other” spending was $48.86 per passenger day in 2008, compared to $49.79 in 2007.

For the fourth quarter ended Nov. 30, 2008, Carnival reported net income of $371 million, or $0.47 per share, on revenues of $3.3 billion, compared to net income of $358 rr,illion, or $0.44 per share, on revenues of $3.1 billion for the same quarter the year before.

The average ticket price was $165.14 per passenger day, compared to $165.42 in 2007. Onboard and other spending averaged $48.05 per passenger day. compared to $5 l the prior year.

Included in the 2008 Q4 result was a gain of $31 million from the sale of the OE2. Without the gain. Carnival’s Q4 earnings would have been lower year-over-year.

More on 2009

In a prepared statement, Carnival said that occupancy levels and pricing for advance bookings were running behind the prior year.

“As expected, 2009 is shaping up to be a challenging year. Over the years we have positioned the company to weather the difficult economic environment we now face,” Arison said. “We have strong cash flow from operations, a solid balance sheet, and a secure liquidity position. In addition we have maintained a high investment credit rating.”

On a constant dollar basis, the company said it expects full-year net revenue yields to decrease from 6 to 10 percent, compared to 1 to 5 percent in its October guidance.

The reduction in guidance was attributed to the fuel surcharge refund for 2009 bookings, combined with a further forecasted reduction in revenues due to deteriorating economic conditions.

Carnival bas 17 new ships on order, scheduled for deliveries between March 2009 and June 2012 – six for its North American brands and 11 for its European cruise lines.

At the end of Q4 08, Carnival had cash of $650 million and total debt of $9 .3 billion.

Capital expenditures for 2009 through 2012 are $3.4 billion for 2009; $3.5 billion for 2010; $2.7 billion for 2011; and $1.7 billion for 2012.