CCL 1Q 2013 REPORT CARD

Takeaway: Getting everything out on the table was a good move but too much uncertainty remains.

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

 

 

OVERALL

  • WORSE:  As we saw in our pricing survey, Europe remains weak.  But lower onboard spend guidance is the new worry. 

CCL 1Q 2013 REPORT CARD - ccl234 

 

BOOKINGS

  • MIXED:  While NA bookings are now running higher, EAA bookings (ex Costa) are well behind for the rest of FY 2013.
  • PREVIOUSLY: 
    • "During the last 13 weeks, fleet-wide bookings and pricing excluding Costa for the first three quarters of 2013, are at the same levels against the very strong booking volumes we experienced last year. Not surprisingly, Costa's pricing is still running behind last year's pricing, but we expect that to change once we lap January of 2012."
    • "For our North American brands, during the 13-week period, bookings are running slightly behind with slightly higher pricing. For EAA brands, the bookings excluding Costa are running at higher levels than last year at lower pricing. We are encouraged by the recent North American booking pattern, especially given consumer distraction from the elections and post-election consumer nervousness about the pending fiscal cliff, and the recent pattern excludes some negative impact on bookings from the Northeast resulting from the Hurricane Sandy. So we are hopeful that once the fiscal cliff issue is resolved and we get into January, and the wave season begins, consumers will start to turn their attention getting on with their lives and booking their cruise vacations." 

COSTA

  • SAME:  Costa is doing well in Asia and is holding strong in Europe.
  • PREVIOUSLY: 
    • "In 2013, operating plan forecasts a nice increase in Costa Asia's profitability."
    • "Recovery of Costa is not a one-year issue, it's going to be multiple years; and we're forecasting a recovery of about half the yield deterioration, that's one item. Two is it's important to understand that we don't cycle through this until the second quarter because the first quarter was done, and the timing of first quarter in this instant versus competitors is very important because it did happen in the middle of our first quarter when the first quarter was done."

CARIBBEAN

  • SAME:  Caribbean pricing continues to be robust
  • PREVIOUSLY: "Caribbean looks strong now."

 2013 COST GUIDANCE

  • WORSE:  Higher dry dock/repair costs mostly attributed to the recent ship problems drove NCC ex fuel costs guidance for 2013
  • PREVIOUSLY: 
    • "There are a few unique items in 2013 that will be difficult to totally overcome which will push our unit costs higher. To begin with, we are expecting that Costa will fill their ships in 2013, which will lead to higher food and other unit costs associated with this higher occupancy. Also, as I have previously indicated, our insurance costs will be higher in 2013. Furthermore, we are anticipating a charge from a closed pension plan for certain British officers. Finally, we are investing in new market development initiatives in Japan, China and Australia including deployment decisions not yet announced. These unique factors alone in 2013 will drive up unit costs 2%."
    •  "And if you take into account the prior year's ship incident cost, we would've been flat year-over-year."

EUROPE

  • WORSE:  Southern Europe demand was weaker than previously thought.  
  • PREVIOUSLY: "In Europe where we have a strong market presence, we anticipate continuing struggling economies during 2013, much as we experienced during 2012."

UK/GERMANY

  • MIXED:  UK/Germany bookings did improve, though at lower prices to fill occupancy.
  • PREVIOUSLY:  "We're starting to have – to see some effect of a weaker economy both in the UK and Germany, which we really didn't see a whole lot in 2012. So if there's anything different, I'd say we're a little bit more concerned. Although those brands are performing well, we are a little bit concerned going forward as the booking curve has tightened in those countries." 

EUROPEAN CAPACITY

  • SAME:  A 17% increase in AIDA capacity drove EAA capacity up 5.1% in 1Q. 
  • PREVIOUSLY:  
    • "The other thing that I haven't seen a lot of focus on is some of our competitors have talked about reducing capacity in Europe. But in reality, our two largest competitors together have increased the Northern Europe capacity by over 20% next year. So, the Northern Europe itineraries have tended to be the highest yielding itineraries in the European market, and that capacity increase will be interesting to see how that all plays out."
    • "All of our capacity increase in Europe next year is in Germany." 

ONBOARD SPENDING

  • WORSE:  Lower onboard spending than anticipated contributed 6 cents to the lowered EPS guidance
  • PREVIOUSLY:  "Our onboard trend overall around the globe for 2013 is very similar to 2012. 2012 we were up like a little over 2% and our guidance for 2013 is in the similar range with increases in all the major categories. Our operating companies have done a great job with some new initiatives and so we're expecting those to be driven higher as well."



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