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Takeaway: Booking strength and strong onboard spend drove the beat on yields and raised FY net yield guidance. Caribbean is the strength, not Europe.


  • 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
    • 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