Miami-based cruise line operator
Carnival Corporation & plc (Carnival), in financials for the second quarter of 2016, has recorded a 41.4 percent decrease in bunker costs.
Bunker fuel expenses amounted to $196 million (down $137 million, or 41.1 percent), having been $333 million during the corresponding period in 2015.
The company paid an average of $243 per metric tonne (pmt) over the period compared to $411 pmt during the same quarter of 2015.
Bunker fuel consumption was at 808,000 tonnes, down slightly from 810,000 tonnes for this quarter last year.
Fuel consumption per available lower berth day (ALBD) in the second fiscal quarter of 2016 was marginally down to 41.0 from 41.9 in 2015.
Unrealized net losses on fuel derivatives were $242 million compared with $34 million in 2015.
2016 forecast
Please find below Carnival's fuel price and fuel consumption forecast for 2016.
Third-quarter 2016 forecast
Fuel price per metric tonne: $339
Fuel consumption (metric tonnes): 810,000
Full-year 2016 forecast
Fuel price per metric tonne: $280
Fuel consumption (metric tonnes): 3,270,000
Financial results
In its overall results for the second fiscal quarter of 2016, Carnival posted an adjusted net income of $605 million, or $0.80 diluted earnings per share (EPS) compared to $222 million, or $0.29 diluted EPS during the prior-year period.
U.S. GAAP net income, which included unrealized losses on fuel derivatives and other net charges of $235 million, was $370 million, or $0.49 diluted EPS. Last year, second quarter U.S. GAAP net income was $193 million, or $0.25 diluted EPS.
Revenues for the second quarter of 2016 were $3.56 billion compared with $2.15 billion the previous year.
Commenting on the results,
Arnold Donald, Carnival Corporation & plc President and Chief Executive Officer, said: " Our strong second quarter demonstrates continued momentum as we again achieved a near doubling of adjusted earnings per share. Our ongoing effort to drive demand for our brands in excess of our measured capacity growth has led to increased revenues and helped maintain the mid-point of our full year earnings guidance despite the recent currency movements and rises in fuel prices that combined represent a negative $0.17 per share."
Third-quarter 2016 outlook
Third quarter constant currency net revenue yields are expected to be up 2 to 3 percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the third quarter are expected to be 6 to 7 percent higher on a constant currency basis compared to the prior year driven by the timing of advertising expense and the re-mastering of Queen Mary 2 in dry-dock. Changes in fuel prices (including fuel derivatives) and currency exchange rates are expected to increase third quarter earnings by $0.01 per share compared to the prior year.
Based on the above factors, the company expects adjusted earnings for the third quarter 2016 to be in the range of $1.83 to $1.87 per share versus 2015 adjusted earnings of $1.75 per share.
2016 outlook
At this time, cumulative advance bookings for the remainder of the year are well ahead of the prior year at slightly higher prices. Since March, bookings for the remainder of the year are at higher prices with volumes running lower than last year because there is less inventory remaining for sale than at this time in 2015.
The company expects full year 2016 net revenue yields on a constant currency basis to be up approximately 3.5 percent versus the prior year, compared to March guidance of approximately 3 percent. The company now expects full year 2016 net cruise costs excluding fuel per ALBD to be up approximately 1.5 percent compared to the prior year on a constant currency basis, better than March guidance of approximately 2.0 percent. Changes in fuel prices (including fuel derivatives) and currency exchange rates are expected to reduce full year earnings by $0.17 per share compared to March guidance.
Taking the above factors into consideration, the company expects full year 2016 adjusted earnings per share guidance to be in the range of $3.25 to $3.35, compared to March guidance of $3.20 to $3.40 and 2015 adjusted earnings of $2.70 per share.
Donald noted: "This is shaping up to be another strong year for our company as we expect over 20 percent earnings growth and are approaching a nine percent return on invested capital. We have accelerated progress toward our stated goal of achieving the double digit return threshold and have accelerated distributions to shareholders. We recently raised our dividend by 17 percent to over $1 billion per year. Since October, we have repurchased nearly $1.9 billion in shares under our stock repurchase program. Yesterday, our Board of Directors approved our third $1 billion share repurchase authorization demonstrating confidence in our outlook and reinforcing our commitment to return value to shareholders."
