Solid pricing.  Better than expected guidance.



"Our North America brands' revenue yields increased 3 percent in the second quarter while yields for our Europe, Australia and Asia brands were up slightly (constant dollars), having been affected by the geo-political events which unfolded in the Middle East and North Africa, as well as the earthquake and nuclear disaster in Japan.  The revenue yield improvement was more than offset by higher fuel prices which cost the company approximately $150 million, or $0.19 per share. Our North America brands continue to perform well, benefiting from the gradual economic recovery, with strong yield growth expected in the second half of the year. We expect lower yields for our Europe, Australia and Asia segment in the second half of 2011 as a result of the significant deployment changes in Europe. Despite the considerable challenges we have faced this year, the long-term fundamentals of our business remain sound."


-Carnival CEO Micky Arison




  • 2Q2011 results:
    • EPS: $0.26 (consensus $0.22)
    • Current $ net revenue yields: +6% (above guidance of +4.5% to 5.5%)
    • Constant $ net revenue yields: +2.3% (higher end of guidance +1.5-2.5%)
    • Gross revenue yields: +5.8%
    • Constant dollar net cruise costs (ex. fuel): +2.7% (higher-end of guidance +2-3%)
    • Gross cruise costs: +10.3%
    • Fuel: +35% YoY to $673/metric ton (higher than guidance of $659), costing $0.19 in EPS
  • 3Q2011 guidance
    • Constant dollar net revenue yields: +1% to 2% (+5.5% to 6.5% on current dollar basis vs guidance of 5.9%)
    • Constant dollar net cruise costs (ex. fuel): +2.5-3.5% (+7.0% to 8.0% on current dollar basis)
    • Fuel: $670/metric ton; 860K metric tons
      • Fuel costs for Q2: $170MM or $0.21 EPS drag
    • EPS: $1.60-1.64 (Consensus: $1.74)
  • FY2011 guidance:
    • Reiterates implied guidance on June 13
      • Diluted EPS: $2.40-2.50
      • Constant dollar net revenue yields: +1.5% to 2.5% 
      • Previously announced, 15 cent (1% yield) adverse geopolitical impact from previous guidance (already includes the 5 cent cost benefit (fuel/FX) from Q2)
    • Current dollar net revenue yields: +4-5% (lower than guidance of +4.5 to 5.5%)
    • Constant dollar net cruise costs (ex. fuel): flat to +1% (unchanged from guidance)
    • Fuel: $639/metric ton (higher than guidance of $631/metric ton)
    • Fuel consumption: 3,415K (lower than guidance of 3,440K)


  • 4 cent 2Q EPS beat: 2 cents from net revenue yields, 2 cents from misc. non-operating items
  • 2Q Capacity: +5%;
    • EAA brands up 9%; NA brand up 3%
  • 2Q Net yields: similar increases in net ticket and net onboard/other revenues
    • NA ticket yield: +3%
    • 2Q: flat Caribbean itineraries
      • On track with easing of pricing pressure as 2011 progresses
    • All other itineraries up except Europe (impacted by ME unrest)
    • EA ticket yield: +1%
      • Itineraries outside of Europe were higher
    • Net onboard and other yields:+2%
      • Driven by NA brands as EAA brands impacted by MENA itinerary changes
  • Net Cruise costs: saw inflation in food costs, travel, and rooms.
  • 10% change in price of fuel for rest of 2011 represents a $0.14 EPS impact
  • 10% change in FX for the rest of 2011 represents a $0.16 EPS impact
  • 2Q more challenging than expected, esp. European brands
  • Fleet-wide reduction will cost $0.20: $0.17 per share related to MENA, ~$0.02 NA brand reduced pricing, $0.01 for Japan
  • Significant increase in Mediterranean capacity was a factor in lower pricing
  • UK: recently, consumer confidence has rebounded and sees stables booking patterns 
  • 2H 2011
    • Fleet-wide pricing higher YoY (more higher in NA than EAA)
    • Occupancies are lower
      • Slightly lower for NA; lower for EAA
    • Looking at trailing 6-wk bookings show improvement
  • NA brands continue to perform well despite slower growth in US economy; this bodes well for 2012 bookings.
  • 3Q 2011
    • +4.8% capacity (NA: +3.3%, EAA: +7.2%)
    • Occu. a little lower
    • Local pricing nicely ahead YoY, despite Europe
    • NA brands: 36% in Caribbean, down YoY; 25% in Europe (17% last year); 23% all others (unchanged YoY)
    • NA pricing: "well ahead of last year"
      • Alaska pricing: higher YoY
      • Caribbean pricing: a little higher
      • Europe pricing: lower
      • Trailing 6-wk NA Booking volumes: "very little inventory left"
    • EAA brands: 83% in Europe
    • EAA pricing: slightly ahead
    • EAA occ: lower
    • Trailing 6-wk EAA booking: strong, with lower prices
  • 4Q 2011
    • +5.8% capacity (NA: +3.2%, EAA: +10%)
    • Pricing nicely higher
    • Occu: lower-- slighty lower for NA, lower for EAA
    • NA brands: 42% in Caribbean down from 50%; 14% in Europe vs 9% last year; 10% in Pacific (unchanged from last year)
      • NA Bookings strong
    • EAA brands: 71% in Europe vs. 64% last year
      • Pricing higher
      • Lower occu
      • Expect EAA pricing to continue to decline 
      • Bookings should pick up
  • 1Q 2012
    • +5.5% capacity (NA: +4.5%, EAA: +7.2%)
    • Pricing higher, occu slightly lower
    • Bookings encouraging
    • NA brands: 65% in Caribbean (unchanged YoY)
      • Caribbean pricing nicely higher with slightly lower occu
      • pricing for all others higher at slightly lower occu.
    • EAA brands: 22% in Caribbean; 20% Europe (23% last year); 18% in South America (16% last year)
    • EAA pricing slightly higher at slightly lower occupancies


  • No visibility for summer 2012, which is normal around this time
  • 2012 NA capacity : +3.5% ; EAA: +8%; 
  • 2012 NA industry capacity: +3%; EAA: +6%
  • Not sure about Greece but hasn't been a significant problem yet
    • 8-9% of capacity in Greece in 2H 2011
    • Seabourn has major presence in Athens
    • Most of Greek islands not impacted
  • Relatively more exposure to MENA in Q4 but have already guided yields lower;
  • Conservative on Q4 outlook
  • Historically when Europe weakens, Alaska does well as an alternative destination
  • Thinks people who canceled MENA bookings went to book other itineraries at lower prices
  • The Q2,Q3,Q4 itinerary changes "have settled down"
  • Q2 five cent cost savings: improvement in fuel efficiency, nonoperating items
  • Onboard spending guidance: expected nomralized basis (up 2% for 2011); relatively stable
    • Up across all categories except casinos; nothing changed since previous guidance
  • Non-operating items:
    • Ships lease benefits
    • FX gains
    • May pick up another cent or two next year
  • No impact from Chilean volcano for Australia and New Zealand Cruises
  • Europe Q2 and beyond repositionings: nothing changed for MENA right now but will change if needed
  • Stopped calling in Israel in Q2 but will restart in the fall
  • No update on fuel hedging
  • Had a significant cost in 4Q 2010 due to fire on Carnival Splendor
  • Going forward on costs: 1/2 of inflation; long-term goal: 0-0.5 of inflation
  • Northern Europe doing well
  • UK brand capacity down slightly
  • Customer deposits: +$400MM (May to May), # has currency benefits
  • Will stop some calls in Tunisia
  • No change in dividend/repurchase decisions
  • Mexico situation--Princess pulling out--seems to be okay
  • "If you price fuel where it is today and we're off to a good start in 2012"
  • NA: premium, luxury Cruises and contemporary all strong 
  • Egypt elections in September could impact Europe redeployment decisions

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