CONF CALL
- Excluding transactional/translation impact, net yield guidance raised from ~2.5% to 3.5% (midpoint)
- Off to strong start in 2015
- $0.28 drag from currency
- 8% onboard yield growth (across the board strength)
- Mid-single digit improvement in Carnival brand for 2015
- Pleased with demand for Caribbean for reminder of year. Much of year booked at higher prices. Will strengthen pricing for remaining inventory.
- 75% of addressable market in North America plan to cruise in next 5 years
- Internet connectivity: 40% improvement in guest satisfaction, 30% increase in revenue
- $70-80m cost savings in FY 2015
- China: 4 ships
- Expect a point in improvement in ROIC in 2015
- Expect Low-mid single yield growth in long-term
- Expect double-digit ROIC target in next 3-4 years
- 1Q breakdown: +0.06 cents from improvement in net onboard yields and +0.05 from timing of costs, -0.06 from FX/fuel
- (CONSTANT DOLLAR BASIS) 1Q:
- Capacity: +2%; NAA: +3%, EAA: flat
- Net ticket yield: flat , removing transactional impact, net ticket yield up 1%
- Expect Caribbean yields to be up for reminder of year
- Bookings from Wave season strong
- For remainder of 3Q 2015, nicely ahead on bookings at slightly higher prices
- NA Brand bookings: Caribbean/Alaska nicely ahead on pricing/occu; all other NA deployment brand (ahead on occu but on lower prices)
- EAA brand bookings: nicely ahead on price/occu (booking volume lower YoY but at higher prices)
- Based on strength of bookings, increased revenue yields
- Impact of fuel of 2015: +$0.63
- Impact of transactional/translation currency : -$0.51
- 2Q 2015: increased dry dock days disproportionally impacting costs
- Marine accounting change: -$0.11 per share (2010-2014), a -$0.01 cent impact in 1Q.
Q & A
- 1Q yield growth: onboard/other yields.
- 1% revenue yield raised guidance: +0.17 impact on EPS
- NA/Europe: ahead on bookings (still on lower end on a historical basis). Very positive trend
- 9 ship deal: have not signed contracts with the yards yet. China will receive some of these new ships.
- Marine account change: one brand was using a different method. Wanted to make the accounting consistent across all the brands.
- Constant currency explanation: prices that the consumer in local currency (3-4% in yields)
- 3-4% yield guidance vs December guidance: in December, it was 2.5% yield in constant currency guidance. So it was raised to 3.5% (midpoint).
- Transational impact: Princess sailing in Australia. Revenues have to be converted back to US$; hence, negative impact given stronger dollar.
- For remaining 3 quarters: raised net ticket guidance (since more visibility), left onboard spend guidance the same
- Not much significant change on 'real demand'
- Expecting uptick in the Caribbean, stronger than Europe. Particularly in Q3 where industry capacity down double digits in Caribbean.
- Removed 4 ships from fleet in 2015 in North America/Europe. Expect they will remove more from North America/Europe in 2016/2017/2018.
- Bookings have been occurring closer and closer to time of sailing. Consumers have changed behavior to some extent.
- Currency impact: -$0.28; net fuel positive: $0.02 (net of derivatives)
- Brent fell more than their fuel grade
- Transactional impact much smaller impact on firm in the past in terms of sourcing. In past, constant dollar was fine. Now need to also consider transactional costs.
- Europe/UK: booking curve are farther out
- Tunisia impact: 2% of port calls, not overly significant
