Miami-based cruise company
) reported impressive fourth-quarter fiscal 2013 results beating
the Zacks Consensus Estimate for both earnings and revenues on
the back of increased cruise ticket prices and higher onboard
spending in Carnival Cruise Lines, offsetting higher operating
Though the company has stated that its net revenue yields will
fall in first-quarter fiscal 2014, it is expected to increase
slowly in the ensuing quarters, benefiting from improving booking
trends and better ticket pricing.
Carnival's fourth-quarter fiscal 2013 adjusted earnings of 4
cents per share outpaced the Zacks Consensus Estimate of a
breakeven result, driven by higher revenues. It was also ahead of
management's guidance range of a loss of 3 cents to earnings of 3
However, quarterly earnings were lower than the year-ago
quarter earnings of 14 cents per share by 71.4%. Higher
operating costs were responsible for the year-over-year decline
Total revenue in the quarter increased 2.2% year over year to
$3,659 million, surpassing the Zacks Consensus Estimate of $3,577
million by nearly 2.3%. Revenues in the quarter were driven by
increased cruise sales resulting from higher ticket prices and
increased onboard spending offsetting lower net revenue
Net revenue yields (in constant currency) declined 2.1% year
over year in the fourth quarter. Gross revenue yields (in current
dollars) also dropped 0.9%.
Carnival earns revenues from its Passenger Tickets business,
Onboard and Other as well as Tour and Other segments.
Passenger Tickets revenues in the quarter increased 1.4% year
over year to $2,697 million.
Onboard and Other:
In the fourth quarter of fiscal 2013, Onboard and Other revenues
were $929 million, up 3.9% year over year.
Tour and Other:
Segment revenues increased 26.9% year over year to $33
Income & Expenses
Operating income was $104 million in third quarter, down
nearly 40.9% year over year as a result of higher operating
Net cruise costs (in constant dollar) per available lower
berth day (ALBD) (fuel and impairments excluded), increased 6.5%
year over year due to the increase in advertising
Carnival's ships have been facing one accident after another
which affected its performance significantly. In order to
recover, the company has undertaken a series of initiatives.
Although these initiatives have pressured the company's profit,
raising its costs at the current level, these are expected to
prove beneficial in the long term.
Fuel price was $671 per metric ton in the quarter, down 6.3%
year over year, while fuel consumption declined 2.7% year over
year. Carnival has been striving hard for the past few quarters
to reduce its fuel consumption. During the fourth quarter, the
company achieved its target of reducing cumulative fuel
consumption by 23% from 2005 through 2013.
Full-Year Fiscal 2013 Results
For full-year fiscal 2013, earnings per share were $1.58 which
was ahead of the Zacks Consensus Estimate of $1.55 per share by
1.9% but below the prior-year earnings of $1.94 per share by
For full-fiscal 2013, revenues were $15.5 billion beating both
the Zacks Consensus Estimate and the prior year's revenues of
$15.4 billion by 0.6%.
First-Quarter Fiscal 2014 Guidance
The company expects net revenue yield (in constant dollar) to
decline in the range of 3% to 4% in first-quarter fiscal 2014.
Net cruise costs per ALBD (in constant dollar), excluding fuel,
are projected to increase 4.5%−5.5%, resulting from increased
Based on higher costs and lower revenues, the company expects
a loss of 7 cents to 11 cents per share in the first quarter
which is significantly lower than the company's year-ago earnings
of 9 cents per share.
Full-Year Fiscal 2014 Guidance
For the full year of fiscal 2014, Carnival expects its
earnings to be within $1.40-$1.80 versus fiscal 2013 earnings of
$1.58 per share.
Although the company's revenue yield is expected to be down in
the first quarter, it will improve in the second half of 2014
driven by better booking environment and higher ticket pricing.
Net revenue yields (in constant dollar) were guided to fall
marginally in fiscal 2014.
Carnival also expects net cruise costs, excluding fuel per
ALBD (on a constant dollar), to increase in fiscal 2014 as
compared with the year-ago levels.
For full-year fiscal 2014, net cruise costs excluding fuel per
ALBD are estimated to be high as compared with the year-ago
We believe that Carnival's turnaround remains on track. The
company's several brand-building efforts and other marketing
promotions are expected to be beneficial. Carnival recently
entered into a partnership with Dr. Seuss Enterprises to provide
a variety of exciting and immersive dining and entertainment
experiences on its fleet of 24 "Fun Ships" as part of its
Reduction in fuel consumption is another bright spot in
Carnival's report card. However, higher operating costs remain a
major headwind for the Zacks Rank #3 (Hold) company.
Like Carnival, another cruise operator
Royal Caribbean Cruises Ltd.
) has undertaken a host of brand building initiatives such as
initiating a travel agent outreach program in June, a vacation
guarantee program and a marketing campaign on prime time.
Other better-ranked stocks in the leisure and recreational
Regal Entertainment Group
SeaWorld Entertainment, Inc.
). Both the companies carry a Zacks Rank #2 (Buy).
CARNIVAL CORP (CCL): Free Stock Analysis
ROYAL CARIBBEAN (RCL): Free Stock Analysis
REGAL ENTMNT GP (RGC): Free Stock Analysis
SEAWORLD ENTERT (SEAS): Free Stock Analysis
To read this article on Zacks.com click here.