Carnival Corporation (CCL) reported first quarter 2012 adjusted earnings of 2 cents per share, above the Zacks Consensus Estimate of loss of 2 cents per share, but deteriorated from the year-ago quarter earnings of 19 cents. On a GAAP basis the company reported a loss of 18 cents per share, due to the charges of $173 million related to Ibero Cruises’ goodwill and trademark impairments and net unrealized gains on fuel derivatives of $21 million.
Carnival’s first quarter total revenue increased 4.8% from the prior-year quarter to $3,582 million.
On a constant currency basis, net revenue yields rose 2.9% in the first quarter from the prior-year quarter. Gross revenue yields rose 1.0% at current dollars. Net cruise costs, excluding fuel per available lower berth day (ALBD), jumped 6.4% year over year on a constant dollar basis. Fuel price of $707 per metric ton was up 30.0% year over year.
Segment Revenue
Passenger Tickets: Revenue increased to $2,764.0 million from $2,652.0 million in the first quarter of 2012.
Onboard and Other: Revenue increased to $809.0 million from $757.0 million in the prior-year quarter.
Tour and Other: Revenue from the segment declined to $9.0 million from $10.0 million in the year-ago quarter.
Second Quarter 2012 Guidance
Management expects net revenue yield on a constant dollar basis excluding the disaster of the ship Costa Concordia, to be flat to down slightly and decrease 2.5% to 3.5% including Costa. Net cruise costs per ALBD, excluding fuel are expected to be flat to down 1% on constant dollar basis.
Fuel costs for the second quarter are expected to increase $85 million year over year, costing an additional 11 cents per share. Based on current fuel prices and currency exchange rates, the company expects adjusted diluted earnings in the range of 5 cents to 9 cents per share.
During the second quarter, the company will take delivery of all three of its new ships for 2012, Costa Fascinosa, AIDAmar and Carnival Breeze.
Full Year 2012 Guidance
Carnival expects net revenue yield on a constant dollar basis excluding Costa to be in line with the year ago quarter, but including Costa, the company views a plunge of 2% to 4% in net revenue yield.
Net cruise costs per ALBD, excluding fuel, are projected to be down 0.5% to up 0.5% on a constant dollar basis. Net cruise costs per ALBD, excluding fuel, are projected to be down 0.5% to 1.5% on a current dollar basis.
Fuel expenses are estimated at $766.0 per metric ton. Carnival has trimmed its non-GAAP earnings range to $1.40 to $1.70 per share, from its previous outlook of $2.55 to $2.85. The company has cut down its earnings mainly due to the sinking of the Costa Concordia off of Italy in January.
Our Take
We believe the Costa disaster is historical and will hit the industry as a whole in the near term. As a result the company is also experiencing slowdown in booking volumes, but we think that in due course of time booking volumes will gradually improve. Additionally, the business of the company's North American brands is less hurt than European brands.
Moreover, we believe that a strong balance sheet and solid cash generation capacity should bode well for Carnival. Capacity growth for Carnival will likely decelerate in 2012 as opposed to 2011 and 2010. The company has also implemented a fuel derivative program to mitigate significant increases in fuel prices.
Carnival, which competes with Royal Caribbean Cruises Ltd. (RCL), currently retains a Zacks #5 Rank (short-term Strong Sell rating). We also reiterate our long-term Neutral recommendation.
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