Carnival Q1: Increased Capacity and Lower Fuel Costs Drive Earnings

Carnival Corporation posted (U.S. GAAP) net income of $142 million, or $0.18 per share, on revenues of $3.7 billion for its first quarter ended Feb. 28, 2016, compared to net income of $49 million, or $0.20 per share, on revenues of $3.5 billion in 2015.

The earnings increase was driven by higher revenue due to a 4 percent capacity increase year-over-year, and lower fuel costs, offset somewhat by losses on fuel derivatives.

Cross brand efforts continue, according to president and CEO Arnold Donald, noting revenue yield software rolling out throughout the year, as well as continued procurement and purchasing efforts across brands.

In focus on the earning’s call was the company’s expanding presence in China.

“The capacity shift to China has helped create relative scarcity in other markets,” added Donald.

Ticket pricing and supply was positive, noted CFO David Bernstein, who said there were improvements on both sides of the Atlantic. Bernstein said wave season bookings were strong, with volumes ahead of 2015 at higher pricing.

Operating income per passenger day jumped to $21.62 from $13.88 last year. Net (U.S. GAAP) income per passenger day was $7.08 compared to $2.56 last year.

On a per passenger day basis, total costs were $160.36 per day for this year, compared to $170.41 last year.

Gross revenue per passenger day was $181.98 this year, compared to $184.29 last year. Gross onboard spend per passenger day also dropped from $46.40 last year to $40.00 this year. Gross ticket spend this year was $135.48 compared to $137.37 last year. The balance was made up from tour and other revenue.

Net revenue per passenger day was $146.65 for this year’s first quarter, down from $147.39 for the same period last year. This breaks down into net ticket revenue of $106.47 and onboard spend of $40.18 per day this year, compared to $106.78 and $40.60, respectively, last year.

The average onboard spend per passenger per cruise was $360.69 this year and $360.94 last year.

Based on current bookings and pricing, the company is forecasting a full-year 2016 adjusted earnings per share to be in the range of $3.20 to $3.40, up from the December guidance of $3.10 to $3.40, and 2015 adjusted earnings of $2.70 per share.

Carnival’s share rose this morning, as did Royal Caribbean and Norwegian, along with a smaller rise in the Dow Jones Industrial Average.

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