Carnival Release Q3 2013 Results, Look to Asia for Growth

Carnival Corp profits slipped-year-on-year according to its third quarter 2013 financial report: non-GAAP net income of $1.1 billion, or $1.38 diluted EPS for the third quarter of 2013 compared to non-GAAP net income for the third quarter of 2012 of $1.2 billion, or $1.53 diluted EPS.

Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted that during the third quarter, the company made significant progress on a number of strategic initiatives to broaden its customer base, spur additional demand and mitigate environmental impacts and higher fuel costs.

"Asia is a key focus of our international expansion. During the third quarter, we opened five additional sales offices in China, following the establishment of a corporate office in Singapore earlier this year," said Donald.  He added that Princess Cruises recently announced plans to homeport Sapphire Princess in China for a four-month season beginning in May 2014, bringing the total to five vessels in the region next year dedicated to guests sourced from Asia.

Key metrics for the third quarter 2013 compared to the prior year were as follows:

• Third quarter U.S. GAAP net income included $176 million of impairment charges related to two smaller Costa ships which are intended to be laid up or sold, and $27 million of impairment charges related to Ibero trademarks and other items.
• On a constant dollar basis, net revenue yields (net revenue per available lower berth day or "ALBD") decreased 3.8 percent for 3Q 2013, which was in line with June guidance of down 3.5 to 4.5 percent. A continued improvement in net revenue yields for Costa  partially offset lower net revenue yields for the North American and Northern European brands in the third quarter. Gross revenue yields decreased 2 percent in current dollars.
• Excluding fuel and impairments, net cruise costs per ALBD increased 4.6 percent in constant dollars, the majority of which is due to higher pension plan contributions as well as costs associated with the previously announced vessel enhancement initiatives and the timing of dry-dock costs, which was better than June guidance of up 8.5 to 9.5 percent. Gross cruise costs including fuel and impairments per ALBD in current dollars increased 8.5 percent.
• Fuel prices increased 2.3 percent to $674 per metric ton for 3Q 2013 from $659 per metric ton in 3Q 2012.
• Fuel consumption per ALBD decreased 5.2 percent in 3Q 2013 compared to the prior year.

The company expects full year 2013 net revenue yields, on a constant dollar basis to be down approximately 3 percent compared to the prior year, toward the lower end of the June guidance range due in part to ongoing geopolitical events in portions of the Eastern Mediterranean region.