Carnival Corporation & plc. said that fuel consumption per available lower berth day (ALBD) decreased by 5.2 percent during the third quarter of 2013 compared to the previous year.
The cruise vessel operator also noted that fuel prices rose by 2.3 percent to $674 per metric tonne in the third quarter, up from $659 per metric tonne during the corresponding period last year.
Details regarding Carnival's fuel consumption were revealed in the release of its third quarter results. The company reported U.S. GAAP net income, which included impairments of $203 million partially offset by unrealized gains on fuel derivatives of $64 million, was $934 million, or $1.20 diluted EPS. For the third quarter of 2012, reported U.S. GAAP net income, which included
unrealized gains on fuel derivatives of $136 million, was $1.3 billion, or $1.71 diluted EPS.
Revenues for the third quarter of 2013 were $4.7 billion, in line with the prior year.
On a constant dollar basis, net revenue yields (net revenue per available lower berth day, or 'ALBD') decreased 3.8 percent in the second quarter of 2013. Gross revenue yields fell by 2 percent in current dollars.
Net cruise costs per ALBD, excluding fuel and impairments, increased by 4.6 percent in constant dollars, the majority of which was said to be due to higher pension plan contributions as well as costs associated with vessel enhancement initiatives and the timing of drydock costs.
Carnival Corporation & plc President and Chief Executive Officer,
Arnold Donald, noted that during the third quarter, the company made 'significant progress' on a number of strategic initiatives to broaden its customer base, spur additional demand and mitigate environmental impacts and higher fuel costs.
Earlier this month, the Carnival announced it had received the support of the U.S. Environmental Protection Agency, the U.S. Coast Guard and Transport Canada to implement a leading edge 'scrubber' technology designed to reduce air emissions on 32 ships. "The company has been a partner in the development of the scrubber technology and will take the lead in further refining both the
scrubber design and installation process over the next few years. In addition to exceeding stricter air emission standards, this technology will help us mitigate escalating fuel costs," said Donald.
Outlook
At this time, cumulative advance bookings for the remainder of 2013 and the first half of 2014 are behind the prior year at prices in line with prior year levels. Since June, fleetwide booking volumes for the next three quarters, excluding Carnival Cruise Lines, are running in line with the prior year at higher prices. Booking volumes for Carnival Cruise Lines during the same period are running behind the prior year at lower prices.
Donald noted: "During the past few months, Carnival Cruise Lines has seen a steady improvement in brand perception among U.S. consumers based on national market research data." He added that Carnival Cruise Lines continues to undertake a variety of brand building initiatives including a major travel agent outreach program which commenced in June, the introduction of a new vacation
guarantee earlier this month and the launch of a new major marketing campaign that debuted yesterday with national TV spots airing on network primetime programming.
The company expects full year 2013 net revenue yields, on a constant dollar basis to be down approximately 3 percent compared to the prior year, towards the lower end of the June guidance range due in part to ongoing geopolitical events in portions of the Eastern Mediterranean region. Excluding fuel and impairments, the company expects full year net cruise costs per ALBD to be higher by 4 percent compared to the prior year on a constant dollar basis, which is at the better end of the June
guidance range. In addition, higher fuel prices are expected to reduce full year 2013 earnings by $0.04 per share compared to June guidance.
Taking the above factors into consideration, the company forecasts full year 2013 non-GAAP diluted earnings per share to be in the range of $1.51 to $1.57, the mid-point of which is in line with June guidance.
For the first half of 2014, Carnival estimates revenue yields will be down in a range similar to the back half of 2013. For the full year 2014, net cruise costs excluding fuel per ALBD are expected to be up in a range similar to 2013.
“While some of our current challenges and cost pressures will continue well into next year, we have tremendous opportunities to enhance shareholder value over time. I have spent my initial months gaining a much deeper understanding of our people and our operations,” said Donald. “The dedication and enthusiasm of our employees is a great foundation to build upon as we strive to achieve even greater success in consistently exceeding the expectations of our guests. We are investing in gaining an even deeper understanding of what drives consumer vacation decisions and onboard enjoyment. This bodes well for attracting first time cruisers as well as powerfully differentiating our brands relative to others,” said Donald.
Fourth Quarter 2013 Outlook
Fourth quarter constant dollar net revenue yields are expected to be down 3 to 4 percent compared to the prior year. Net cruise costs excluding fuel and impairments per ALBD for the fourth quarter are expected to be higher by 3.5 to 4.5 percent on a constant dollar basis compared to the prior year, which is primarily due to increased advertising expenses and costs associated with the previously announced vessel enhancement initiatives.
Based on the above factors, the company expects non-GAAP diluted earnings for the fourth quarter 2013 to be in the range of $(0.03) to $0.03 per share versus 2012 non-GAAP earnings of $0.14 per share.
2013 Fuel Price and Fuel Consumption Forecast
Fourth quarter:
Fuel price per metric tonne: $687
Fuel consumption (metric tonnes): 825,000
Full Year
Fuel price per metric tonne: $680
Fuel consumption (metric tonnes): 3,275,000
