Carnival speeds to strong start fuelled by demand for Caribbean cruises

Cruise ship operator Carnival reported better than expected revenue yields for the first quarter and said bookings for the rest of 2017 were well ahead of the prior year with prices rising faster than costs.

Driven by increased demand, particularly for Caribbean jaunts, For the first quarter ended 28 February, the London- and New York-listed group posted adjusted net income of $279m and earnings per share of $0.38, which was down 7% and 3% on a very strong equivalent period last year.

Statutory results, which include a positive $73m of unrealised gains and losses on fuel derivatives and other items in 2017 and $159m of losses for 2016, saw net income increase almost 150% to $352m and EPS up 167% to $0.48.

Quarterly net revenue yields in constant currency increased 3.8% compared to Q1 in the prior year, well up on December's 1.5-2.5% guidance range.

On the outlook for the year, management said cumulative advance bookings for the remainder of 2017 were "well ahead of the prior year at considerably higher prices".

For the full year, net revenue yields in constant currency are expected to be up approximately 3.0% compared to the prior year.

In parallel, excluding fuel, net costs per available lower berth day in constant currency are expected to be up approximately 1.0% compared to the prior year.

Therefore, full year adjusted EPS is expected to be in the range of $3.50-3.70, compared to $3.45 last year.

Though in the second quarter, adjusted EPS is expected to fall to a range of $0.43-0.47, compared to $0.49 last year due to unfavourable changes in fuel prices and currency exchange rates.

“We are off to a good start delivering another quarter of operational improvement on top of a very strong first quarter last year," said chief executive Arnold Donald.

"Our performance was driven by increased demand, particularly for our core Caribbean itineraries, leading to higher year-over-year ticket prices which enabled us to overcome the significant negative impact of both fuel and currency to exceed the high end of our guidance range.”

He said there was less inventory remaining for sale in 2017 compared to the prior year, resulting in increased earnings guidance.

"We are clearly benefiting from our efforts to increase cruise consideration through guest experience innovations, creative marketing, and public relations programs. We are reaching consumers through multiple touch points and laying the foundation for continued earnings improvement and sustained double digit returns on invested capital,” he said.