Carnival Earnings Set Sail

On a GAAP basis, Carnival posted a quarterly net loss of $0.13 per share, primarily due to a $277 million unrealized gain on fuel derivatives. The company also took one-time restructuring charges of $18 million and an impairment charge on ships of $17 million.

For the full year, Carnival posted adjusted EPS of $1.96, compared with last year’s total of $1.58. Full-year revenues were up from $15.46 billion to $15.88 billion. The consensus estimates called for 2014 EPS of $1.89 on revenues of $15.97 billion.

The company guided first-quarter fiscal 2015 revenues flat to up 1%, compared with the first quarter of 2014. Lower fuel costs and currency exchange effects are expected to contribute $0.16 to earnings in the quarter, and Carnival forecast EPS for the quarter in the range of $0.07 to $0.11. The consensus estimate calls for EPS of $0.10 on revenues of $3.8 billion.

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For the full 2015 fiscal year, the company said that fuel costs net of derivatives are expected to benefit earnings by $0.61 a share. Currency exchange effects will shave $0.20 a share off the fuel-cost savings, leading to a forecast for full-year EPS in the range of $2.30 to $2.60. The consensus estimate calls for EPS of $2.34 on revenues of $16.85 billion.

Carnival’s CEO said:

Full year earnings were significantly higher than the prior year primarily due to strong profit improvement at both our Carnival Cruise Lines and Costa Cruises brands. …[O]perating profit more than doubled due to higher ticket prices and onboard spending combined with lower costs, also exceeding previous guidance. … The current base of business for 2015 builds confidence in our expectation of continuing yield growth with acceleration in yield improvement starting in the second quarter. Based on our current 2015 guidance, we expect to achieve a 50 percent improvement in earnings compared to 2013 and are firmly on a path toward delivering double-digit returns on invested capital.

Carnival’s shares were trading up about 0.1% early Friday morning, at $44.49 in a 52-week range of $33.11 to $44.98. Thomson Reuters had a consensus analyst price target of around $47.00 before the report.

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