Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) announced non-GAAP net income of $13 million, or $0.02 diluted earnings per share for the first quarter of 2012. Reported U.S. GAAP net loss was $139 million, or $0.18 diluted loss per share, which includes a non-cash write down for Ibero Cruises’ (“Ibero”) goodwill and trademark assets of $173 million and net unrealized gains on fuel derivatives of $21 million. Net income for the first quarter of 2011 was $152 million, or $0.19 diluted EPS. Revenues for the first quarter of 2012 increased to $3.6 billion from $3.4 billion for the prior year, the Company's press release said.
First quarter 2012 results reflect Costa Concordia incident expenses of $29 million, including a $10 million insurance deductible related to third party personal injury liabilities. During the first quarter of 2012, the company also recorded an insurance recoverable of $515 million (€384 million), which offset the write off of the net carrying value of Costa Concordia as the ship has been deemed to be a constructive total loss.
Carnival Corporation & plc Chairman and CEO Micky Arison noted “All of us at Carnival Corporation & plc are deeply saddened by the Costa Concordia tragedy. Our hearts go out to everyone affected, particularly the families of the deceased and missing. The global cruise industry has an outstanding safety record and every one of our brands is committed to the well-being of our guests and crew. Immediately following the Costa Concordia accident we ordered a thorough review, with the help of industry-leading experts, to understand what happened as well as to conduct an extensive audit of all safety and emergency response procedures across all of our cruise lines. We will work tirelessly to understand what went wrong, and make sure it never happens again.”
Key metrics for the first quarter 2012 compared to the prior year were as follows:
- On a constant dollar basis net revenue yields (net revenue per available lower berth day, “ALBD”) increased 2.9 percent for 1Q 2012 (up 3.7 percent excluding Costa), which was higher than the company’s December guidance, up 1.5 to 2.5 percent. Gross revenue yields increased 1.0 percent in current dollars.
- Net cruise costs excluding fuel per ALBD increased 6.4 percent in constant dollars, higher than the December guidance, up 3.5 to 4.5 percent, due to a $34 million impairment charge related to Costa Allegra and the above referenced incident related expenses. As previously disclosed, the remaining increase from the prior year was primarily due to the higher number of dry-dock days. Gross cruise costs including fuel per ALBD in current dollars increased 6.6 percent.
- Fuel prices increased 30 percent to $707 per metric ton for 1Q 2012 from $543 per metric ton in 1Q 2011, costing the company an additional $137 million. They were also higher than December guidance of $652 per metric ton, costing an additional $46 million.
- The company recorded $173 million of charges related to Ibero goodwill and trademark impairments primarily as a result of slower than anticipated Ibero capacity growth due to the current state of the Spanish economy.
- During the first quarter, the company entered into zero cost collars for an additional 10 percent of its estimated fuel consumption for the second half of 2012 through fiscal 2015, bringing the total to approximately 20 percent over the same time period. The company recognized $21 million of net unrealized gains on its portfolio of fuel derivatives during 1Q 2012. For further information on the company’s fuel derivatives program see “Fuel Derivatives” below.
2012 Outlook
The company’s expectations for 2012 will be affected by the direct and indirect financial consequences of the Costa Concordia incident. At this time, cumulative advance bookings, excluding Costa, for the remainder of 2012 are approximately 3 occupancy points behind the prior year with prices slightly higher than last year’s levels (constant dollars). Since the date of the Costa Concordia incident in mid-January through February 26, fleetwide booking volumes, excluding Costa, have shown improving trends but are still running high single digits behind the prior year at slightly lower prices. There has been less impact on the company’s North American brands than European brands. Booking volumes for Costa during the same period are running significantly behind the prior year at lower prices, however, Costa has curtailed virtually all of its marketing activities during this period.