Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net income of $175 million, or $0.22 diluted EPS, on revenues of $3.1 billion for its first quarter ended February 28, 2010. Net income for the first quarter of 2009 was $260 million, or $0.33 diluted EPS, on revenues of $2.9 billion.

Carnival Corporation & plc Chairman and CEO Micky Arison indicated that operating results in the first quarter 2010 were better than the company’s December guidance due to a combination of better than expected net revenue yields and lower than expected unit costs.  The first quarter included a $0.05 gain from the sale of P&O Cruises’ Artemis, as previously announced.

Commenting on the first quarter, Arison said, “We were very encouraged by our results as pricing continued to rebound off last year’s lows and we returned to top line revenue growth after a challenging 2009. During the quarter, the booking environment continued to improve for our North American brands and we achieved stronger than expected pricing on close in bookings. In addition, we continue to realize significant cost savings worldwide, though the strength of our performance was masked by rising fuel prices.” Higher fuel prices reduced earnings in the first quarter by $0.22 per share as compared to the prior year.

Key metrics for the first quarter of 2010 compared to the prior year were as follows:

• On a constant dollar basis net revenue yields (net revenue per available lower berth day) decreased 2.3 percent for Q1 2010, which was better than our December guidance of down 3 to 4 percent. Net revenue yields in current dollars increased 1.0 percent due to favorable currency exchange rates. Gross revenue yields decreased 1.3 percent in current dollars driven by lower air transportation revenue.
• Excluding fuel and the gain on the sale of Artemis, net cruise cost per available lower berth day (“ALBD”) declined 4.5 percent in constant dollars, which was better than our December guidance of down 2 to 3 percent.                        
• Including fuel and the gain on the ship sale, net cruise costs per ALBD increased 3.5 percent on a constant dollar basis (increased 6.2 percent in current dollars). Gross cruise costs per ALBD increased 1.7 percent in current dollars.
• Fuel price increased 80 percent to $497 per metric ton for Q1 2010 from $276 per metric ton in Q1 2009 and was higher than the December guidance of $474 per metric ton.

During the first quarter the company announced that the Board of Directors voted to resume its quarterly dividend at $0.10 per share, signifying its confidence in the earnings power of our global cruise brands despite the current economic environment. A further demonstration of our confidence in the business was the company’s recent announcement of a memorandum of agreement with Italian shipbuilder Fincantieri for the construction of two 3,600-passenger ships for Princess Cruises. The 139,000-ton ships would be the largest in the Princess fleet and would enter service in 2013 and 2014. Also during the quarter, the company successfully introduced two new ships, AIDAblu and Costa Deliziosa, for its growing European brands. 

Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net income of $175 million, or $0.22 diluted EPS, on revenues of $3.1 billion for its first quarter ended February 28, 2010. Net income for the first quarter of 2009 was $260 million, or $0.33 diluted EPS, on revenues of $2.9 billion.

Carnival Chairman and CEO Micky Arison indicated that operating results in the first quarter 2010 were better than the company’s December guidance due to a combination of better than expected net revenue yields and lower than expected unit costs. The first quarter included a $0.05 gain from the sale of P&O Cruises’ Artemis, as previously announced.

Commenting on the first quarter, Arison said, “We were very encouraged by our results as pricing continued to rebound off last year’s lows and we returned to top line revenue growth after a challenging 2009. During the quarter, the booking environment continued to improve for our North American brands and we achieved stronger than expected pricing on close in bookings. In addition, we continue to realize significant cost savings worldwide, though the strength of our performance was masked by rising fuel prices.” Higher fuel prices reduced earnings in the first quarter by $0.22 per share as compared to the prior year.

Key metrics for the first quarter of 2010 compared to the prior year were as follows:

On a constant dollar basis net revenue yields (net revenue per available lower berth day) decreased 2.3 percent for Q1 2010, which was better than our December guidance of down 3 to 4 percent. Net revenue yields in current dollars increased 1.0 percent due to favorable currency exchange rates. Gross revenue yields decreased 1.3 percent in current dollars driven by lower air transportation revenue.

Excluding fuel and the gain on the sale of Artemis, net cruise cost per available lower berth day (“ALBD”) declined 4.5 percent in constant dollars, which was better than our December guidance of down 2 to 3 percent.

Including fuel and the gain on the ship sale, net cruise costs per ALBD increased 3.5 percent on a constant dollar basis (increased 6.2 percent in current dollars). Gross cruise costs per ALBD increased 1.7 percent in current dollars.

Fuel price increased 80 percent to $497 per metric ton for Q1 2010 from $276 per metric ton in Q1 2009 and was higher than the December guidance of $474 per metric ton.

During the first quarter the company announced that the Board of Directors voted to resume its quarterly dividend at $0.10 per share, signifying its confidence in the earnings power of our global cruise brands despite the current economic environment. A further demonstration of our confidence in the business was the company’s recent announcement of a memorandum of agreement with Italian shipbuilder Fincantieri for the construction of two 3,600-passenger ships for Princess Cruises. The 139,000-ton ships would be the largest in the Princess fleet and would enter service in 2013 and 2014. Also during the quarter, the company successfully introduced two new ships, AIDAblu and Costa Deliziosa, for its growing European brands.

2010 Outlook

Since the start of the calendar year, booking volumes for the remaining three quarters are running ahead of the prior year with prices significantly higher than last year’s discounted levels. At this time, cumulative advance bookings for the remainder of the year are in line with last year at higher prices.
Arison noted, “We have enjoyed a very robust wave season, setting booking records during the quarter. Wave season bookings were fueled by attractive pricing in the marketplace and pent-up demand from those who postponed vacations last year. As a result, pricing continues to increase, particularly for the peak summer season. Having achieved significantly higher pricing, we expect revenue yields for the remaining three quarters of the year to increase approximately 3 to 4 percent (in constant dollars) compared to last year. Vacationers should take advantage of the current low rates now as prices are going up.”

The company expects full year net revenue yields, on a constant dollar basis, to increase 2 to 3 percent compared to flat to up 1 percent in its December guidance. Since the December guidance, forecasted constant dollar revenues have increased approximately $170 million. The company expects net revenue yields on a current dollar basis to increase 2 to 3 percent for the full year 2010 compared to 2009.
The company now expects net cruise costs excluding fuel per ALBD for the full year 2010 to be down approximately 2 to 3 percent on a constant dollar basis compared to down 1 to 2 percent in its December guidance.

However, since the December guidance, fuel prices have increased. Based on current spot prices for fuel, fuel costs are now expected to increase $483 million for the full year compared to 2009, costing an additional $0.60 per share. Since the December guidance, fuel costs are expected to reduce earnings by $117 million. In addition, strengthening of the U.S. dollar since the December guidance is expected to reduce earnings by approximately $85 million.

Taking all the above factors into consideration, the company now forecasts full year 2010 fully diluted earnings per share to be in the range of $2.25 to $2.35, compared to its December guidance range of $2.10 to $2.30.

Second Quarter 2010

Second quarter constant dollar net revenue yields are expected to increase in the 1 to 2 percent range (2.5 to 3.5 percent on a current dollar basis) compared to the prior year. Net cruise costs excluding fuel per ALBD for the second quarter are expected to be approximately 3.5 to 4.5 percent lower on a constant dollar basis. However, fuel costs for the second quarter are expected to increase $176 million compared to the prior year, costing an additional $0.22 per share.

Based on current fuel prices and currency exchange rates, the company expects earnings for the second quarter of 2010 to be in the range of $0.26 to $0.30 per share, down from $0.33 per share in 2009.
During the second quarter two new ships will debut in Europe-P&O Cruises’ 3,100-passenger Azura, and Seabourn’s 450-passenger Seabourn Sojourn, furthering the company’s strategy to expand its global presence.