Carnival Corporation & plc. reports that fuel expenses plummeted $205 million, or 39.2 percent, during the three months ended February 28, 2015, compared to the previous year.
Bunker fuel expenses amounted to $318 million between December and February, having been $523 million during the prior year period.
Bunker fuel consumption fell by 17,000 tonnes, or 2.1 percent, to 783,000 tonnes, down from 800,000 tonnes last year. The figure was 3,000 tonnes higher than the December guidance forecast level of 780,000 tonnes.
The average fuel cost per metric tonne consumed nosedived $248 per tonne, or 37.9 percent, to $406 per tonne, down from $654 per tonne during the three months ended February 28, 2014. The latest quarterly figure was $15 lower than the December guidance price of $421 per metric tonne.
Fuel consumption per available lower berth day (ALBD) in the first fiscal quarter of 2015 fell to 0.042, down from 0.044 in 2014.
Net losses on fuel derivatives were $169 million compared to a net loss of $16 million in 2014.
Please find below Carnival's fuel price and fuel consumption forecast for 2015.
Second quarter 2015 forecast
Fuel price per metric tonne: $402
The average fuel price per metric tonne during the second quarter of 2014 was $657 per tonne.
Fuel consumption (metric tonnes): 810,000
The amount consumed during the second quarter of 2014 was 802,000 tonnes.
Full year 2015 forecast
Fuel price per metric tonne: $406
The figure is $230 per tonne lower than Carnival's $636 per tonne average purchasing price in 2014.
Fuel consumption (metric tonnes): 3,190,000
The figure is 4,000 tonnes lower than the 3,194,000 tonnes purchased by Carnival in 2014.
Financial results
In its overall results for the first fiscal quarter year, Carnival posted a non-GAAP net income of $159 million, or $0.20 diluted earnings per share (EPS), compared to a non-GAAP net loss of $3 million, or $0.00 per share, for the first quarter of 2014.
U.S. GAAP net income, which included unrealized losses on fuel derivatives of $112 million, was $49 million, or $0.06 diluted earnings per share. During the corresponding quarter in 2014, the U.S. GAAP net loss was $20 million, or $0.03 diluted loss per share.
Revenues for the first quarter of 2015 were $3.521 billion compared to $3.696 billion in the prior year.
Commenting on the results, Carnival Corporation & plc President and Chief Executive Officer
Arnold Donald said: "The year is off to a strong start achieving significantly higher earnings than the prior year and our previous guidance. Our onboard revenue initiatives drove particularly strong improvement in the first quarter with onboard yields more than 8 percent higher than prior year (constant dollar).” Donald also noted that the Carnival Cruise Line brand continued to outperform, achieving significant revenue yield growth and remains on track for a strong year. Additionally, Costa's Asia operations achieved double-digit revenue yield growth, affirming the pent-up demand in the region and building confidence in the long-term potential for growth."
2015 outlook
Cumulative advance bookings for the remainder of 2015 are said to be ahead of the prior year at higher prices. Since January, booking volumes for the remainder of the year are running in line with last year's historically high levels at higher prices, Carnival said.
Donald noted: "We are experiencing an ongoing improvement in underlying fundamentals based on our successful initiatives to drive demand. Our efforts to further elevate our guest experience are clearly resonating with consumers and, notably, improving the frequency and retention of our loyal guests."
The company expects full year 2015 net revenue yields to increase by 3 to 4 percent on a constant currency basis, which excludes translation and transactional currency impacts, compared to the prior year. This is one full point better than the December guidance on a constant currency basis. On a constant dollar basis, which does not exclude the unfavourable transactional impact of currency, the company still expects yields to be approximately 2 percent higher than the prior year. The company expects net cruise costs excluding fuel per ALBD for full year 2015 to be up 2 to 3 percent compared to the prior year on a constant dollar basis, which is better than the December guidance of up 3 percent, due primarily to the favorable transactional currency impact.
Since December, unfavourable changes in currency exchange rates (constant currency) have reduced full year 2015 earnings expectations by $219 million, or $0.28 per share. However, this impact has been significantly offset by the improvement in the company's operating performance, resulting in just a $0.05 reduction to the midpoint of December guidance, Carnival said.
Taking the above factors into consideration, the company forecasts full year 2015 non-GAAP diluted earnings per share to be in the range of $2.30 to $2.50, compared to 2014 non-GAAP diluted earnings of $1.93 per share.
Looking forward, Donald stated: "Consistent with many global companies, the strengthening of the U.S. dollar has hampered our full year earnings expectations, masking the 3 to 4 percent (constant currency) yield increase our collective brands are expecting to achieve. Our successful initiatives to drive both ticket and onboard revenue yields have improved our financial performance and we remain on track toward our goal of achieving double-digit return on invested capital in the next three to four years."
Second quarter 2015 outlook
Second quarter constant dollar net revenue yields are expected to increase by 2 to 3 percent compared to the prior year. Net cruise costs excluding fuel per ALBD for the second quarter are expected to be up 6.5 to 7.5 percent on a constant dollar basis compared to the prior year. The increase is driven by higher annual dry-dock costs primarily all of which will be incurred in the second quarter. Changes in fuel prices net of fuel derivatives and currency exchange rates (constant currency) are expected to benefit second quarter earnings by $74 million compared to the prior year, or $0.09 per share.
Based on the above factors, the company expects non-GAAP diluted earnings for the second quarter 2015 to be in the range of $0.11 to $0.15 per share versus 2014 non-GAAP earnings of $0.09 per share.
