Carnival Corporation’s (CCL) third quarter 2010 earnings came in at $1.62 per share, ahead of the Zacks Consensus Estimate of $1.47 and year-ago quarter of $1.33. Earnings for the quarter exceeded management’s guidance of $1.43 to $1.47 per share. The improvement in results was aided by better-than-expected net revenue yields, fueled by a robust demand in summer season and ongoing cost reduction initiatives, which more than offset the hike in fuel prices.

Total revenue of Carnival Corporation, the world’s largest cruise company, spiked up 7% from the prior-year quarter to $4.43 billion, in line with the Zacks Consensus Estimate. Net revenue yields increased 2.5% from the prior-year quarter, largely attributable to a favorable foreign exchange rate. On a constant currency basis, net revenue yields rose 6.2% from the prior-year quarter versus management’s guidance of up 5% to 6%. Gross revenue yields increased 1.2% in current dollars, driven by lower air transportation revenues.

Net cruise costs, including fuel, climbed 0.6% from the year-ago level on a constant dollar basis. Fuel price of $473 per metric ton was up 17% year over year, a slight decrease from management’s guidance of $493 per metric ton.

Segment Revenues

Passenger Tickets: Revenues from Passenger Tickets increased to $3,377 million from $3,105 million in the third quarter of 2009.

Onboard and Other: Revenues from Onboard and Other jumped to $847 million from $825 million in the prior-year quarter.

Tour and Other: Revenues from Tour and other segment declined to $202 million from $209 million in the year-ago quarter.

During the reported quarter, the company took delivery of a new ship, Holland America Line’s 2,106-passenger Nieuw Amsterdam, and signed an agreement of a 2,192-passenger cruise ship for AIDA Cruises with Germany’s Meyer Werft.

Financial Position

At the end of the quarter, the company had cash and cash equivalents of $527 million, long-term debt of $7.6 billion and shareholder equity of $22.6 billion. Cash flow from operations was $1.3 billion and capital expenditures totaled $670 million in the third quarter.

Fourth Quarter 2010 Guidance

  • Net revenue yields are expected to be up 2.5% to 3.5% (decline 1–2% on a constant dollar basis). Net cruise costs — excluding fuel — are expected to be down 1% to 2%, compared with the prior-year quarter, on a constant-dollar basis.
  • Based on current fuel prices and currency exchange rates, Carnival Corporation expects earnings for the fourth quarter of 2010 to be in the range of 32 cents to 36 cents per share.

In the fourth quarter of 2010, one new ship will be launched in Europe: Cunard Line’s 2,092-passenger Queen Elizabeth. This will expand Carnival Corporation’s global footprint.

Full Year 2010 Guidance

  • Carnival Corporation reiterated its net revenue yields guidance of up 2% to 3% on a constant dollar basis. However, net revenue yields on a current dollar basis are expected to increase 1%, due to the favorable changes in exchange rate.
  • Net cruise costs per available lower berth date, excluding fuel, are projected to be down 4.0% on a constant-dollar basis, better than its previous guidance of decline in a range of 2.5% to 3.5%.
  • Fuel expenses for 2010 are now expected to increase only by $410 million on a year-over-year basis, as compared with previous expectation of $440 million due to a decline in fuel prices.
  • Carnival Corporation has also raised its earnings estimates for full-year 2010 in the range of $2.48 to $2.52 from $2.25 to $2.35, based on strong booking for the rest of 2010.

 
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