Wed 25 Jun 2014, 14:33 GMT

Carnival bunker costs down $28 million in Q2


Fuel expenses fall by 5% for Carnival as bunker consumption declines by 12,000 tonnes and the average fuel cost per metric tonne is down 3.8%.



Carnival Corporation & plc. reports that fuel costs decreased by US$28 million, or 5.0 percent, during the three months ended May 31, 2014 compared to the previous year.

Bunker fuel expenses amounted to $527 million between March and May, having been $555 million during the corresponding period in 2013.

Bunker fuel consumption during the three-month period fell by 12,000 tonnes, or 1.47 percent, to 802,000 tonnes, down from 814,000 tonnes the previous year.

During the six months ended May 31, Carnival consumed 1,603,000 tonnes of fuel compared to 1,640,000 tonnes during the prior year period, which represents a decrease of 37,000 tonnes, or 2.26 percent.

The average fuel cost per metric tonne consumed between March and May fell by $26 per tonne, or 3.8 percent, to $657 per tonne, down from $683 per tonne during the corresponding period in 2013. The latest quarterly figure was higher than the March guidance price of $649 per metric tonne.

Fuel consumption per available lower berth day (ALBD) decreased by 6 percent in second quarter of 2014 compared to the previous year.

Please find below Carnival's fuel price and fuel consumption forecast for 2014.

2014 Fuel Price and Fuel Consumption Forecast

Third quarter 2014:
Fuel price per metric tonne: $673
Fuel consumption (metric tonnes): 805,000

Full Year 2014
Fuel price per metric tonne: $665 ($653 in March guidance)
Fuel consumption (metric tonnes): 3,210,000 (3,230,000 in March guidance)

In its overall results for the second quarter of 2014, Carnival posted a non-GAAP net income of $80 million, or $0.10 diluted earnings per share (EPS) for the second quarter of 2014 compared to non-GAAP net income for the second quarter of 2013 of $57 million, or $0.07 diluted EPS.

U.S. GAAP net income, which included a net gain on vessel transactions of $15 million and net unrealized gains on fuel derivatives of $11 million, was $106 million, or $0.14 diluted EPS.

Revenues for the second quarter of 2014 were $3.6 billion, compared with $3.5 billion the prior year.

Commenting on the results, Carnival Corporation & plc President and Chief Executive Officer Arnold Donald noted that second quarter earnings were significantly better than anticipated in the company’s March guidance due to better than expected net revenue yields for most of the company’s cruise brands, as well as lower than expected net cruise costs.

Donald said: "We benefited from effective marketing initiatives, which combined with a gradually improving economic environment, led to revenue yield improvement for our continental European brands in the quarter compared to the prior year and is expected to continue through the remainder of the year. In addition, we achieved a six percent improvement in fuel consumption."

2014 Outlook

Carnival said that since March, fleetwide booking volumes for the next three quarters are running slightly behind last year at higher prices. At this time, cumulative advance bookings for the remainder of 2014 are slightly ahead of the prior year at higher prices.

Donald noted: "Collectively our brands are gaining momentum in our efforts to drive higher ticket prices and we continue to expect sequential improvement in revenue yields, despite a more competitive environment in the Caribbean this summer. We remain focused on further understanding our guests and refining the exceptional customer experience we provide. We have also made significant strides in our efforts to identify opportunities for cross-brand operational efficiencies. This work is still in the early stages, but we are making progress and beginning to see encouraging signs. We believe we have reached a positive inflection point for our company as we return to earnings growth in 2014 and work hard to ensure that growth accelerates in the years to come."

Total revenues are expected to be higher for the full year 2014 compared to the prior year. The company continues to expect full year 2014 net revenue yields on a constant dollar basis to be down slightly compared to the prior year (flat to up slightly on a current dollar basis). The company now expects full year 2014 net cruise costs excluding fuel per ALBD to be flat to up slightly compared to the prior year on a constant dollar basis, which is better than had been anticipated in the March guidance. However, changes in fuel prices and currency exchange rates have reduced full year 2014 forecasted earnings by $0.06 per share compared to March guidance.

Taking the above factors into consideration, the company has increased its full year 2014 non-GAAP diluted earnings per share guidance to be in the range of $1.60 to $1.75, compared to 2013 non-GAAP diluted earnings of $1.58 per share.

Third Quarter 2014 Outlook

Third quarter constant dollar net revenue yields are expected to be flat to down 1 percent compared to the prior year due primarily to a significant industry capacity increase in the Caribbean.

Net cruise costs excluding fuel per ALBD for the third quarter are expected to be 1 to 2 percent higher on a constant dollar basis compared to the prior year.

Based on the above factors, the company expects non-GAAP diluted earnings for the third quarter 2014 to be in the range of $1.38 to $1.44 per share versus 2013 non-GAAP earnings of $1.38 per share.


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