Carnival Corp. Beats Forecasts Emphasizing Momentum in Cruise Business

 

Carnival Corporation, the largest cruise ship operator with a fleet of approximately 90 ships, knocked off a series of new records during its second quarter providing further evidence of the continuing momentum and recovery in the cruise industry. Based on the strength of its quarterly results, which beat analysts’ estimates, the corporation also increased its full-year guidance joining the large other cruise companies, Royal Caribbean Group and Norwegian Cruise Line Holdings, based on strong pricing and booking increasing their forecasts for 2024 and beyond.

Analysts highlighted that it was a very strong quarter for Carnival Corp. and while maybe not a “blow out” it was solidly ahead of expectations. Quarterly net income for example was up $500 million compared to 2023. They set records for second quarter operating income ($560 million) which was five times 2023 levels based on record second quarter revenues of $5.8 billion. 

"We have made incredible strides in improving our commercial operations, strategically reallocating our portfolio composition, and formulating growth plans,” said Carnival Corporation's Chief Executive Officer Josh Weinstein. “Off the back of that effort, we closed yet another quarter delivering records, this time across revenues, operating income, customer deposits, and booking levels, exceeding our guidance on every measure."

Analysts noted that the company is maintaining its solid booking position with limited inventory across most brands for the remainder of 2024. Net per diems (the daily price for passengers) were up over six percent driven both by higher ticket prices and higher onboard spending. Analysts noted that the company is maintaining its strong pricing coming off a period of promotional fares which were used to rebuild the business after the pandemic.

The company continues to seek enhancements to its operations recently completing the transfer of the third ship from its Costa brand to Carnival Cruise Line, which they said is now the highest-returning brand in the company's global portfolio. With a strategy that includes two more mega-ship newbuilds for Carnival Cruise Line and consolidation of two ships from the P&O Australia brand, they noted Carnival Cruise Line will increase as a percentage of the corporation’s portfolio from 29 percent as of 2019 to 37 percent in 2028.

Other steps included the delivery of the Queen Anne, the first new cruise ship built for the Cunard brand in 14 years. The corporation is slowly moving back into newbuilds with the two orders for Carnival Cruise Line but expects a slow pace at construction.

Significantly, Carnival Corporation also ended the quarter with an all-time high of $8.3 billion for total customer deposits. They noted this was up by $1.1 billion from the May 2023 record of $7.2 billion and shows strong forward momentum carrying into 2025. They reported for the first time that 2025 had record booking volumes saying while it is early they already have an even higher cumulative advanced booking position for the full year 2025 than in 2024 both at price and occupancy.

"We are very pleased with the continued acceleration of demand for 2025 and beyond, which builds upon the fantastic achievements in 2024 thus far," said Weinstein. “This positive trajectory is a testament to the successful execution of our demand generation efforts and the delivery of exceptional vacation experiences once onboard.”

The strength of the financial performance also helped the company to manage its debt profile away from the near financial disaster of the pandemic as it aims to reach investment grade status. The corporation repaid loans and repriced additional loans. As a result, they highlighted the capital structure has been simplified and interest expenses lowed by $85 million on an annualized basis.

The increased guidance added $275 million to adjusted net income now projected at approximately $1.55 billion. They are expecting net yields up better than 10 percent compared to 2023 and a nearly 40 percent improvement to EBITDA of approximately $5.83 billion for the year.

Carnival Corporation emphasized the strong momentum for cruising demonstrated by the less inventory for sale for the remainder of 2024 and the strength of future bookings. Investors responded positively driving the stock price up nearly nine percent. The stock is now approximately 10 percent off its 52-week high and up nearly 30 percent from its low in April 2024.