Carnival posts 20.9% rise in Q1 bunker costs

Average price paid for marine fuel jumped 20.7% to $437 per tonne.

The Carnival Valor docked at Nassau, Bahamas. Image credit: Charles Pluta Flickr CC BY-SA 2.0

Updated on 23 Mar 2018 11:03 GMT

US cruise operator Carnival Corporation & plc reports that it recorded a 20.9 percent jump in bunker costs, year-on-year (YoY) , during the company's first fiscal quarter (Q1) of 2018, which runs between December 1 and February 28.

Bunker fuel expenses in Q1 amounted to $359 million (up $62m, or 20.9 percent), having been $297m during the corresponding period the previous year.

The company paid an average of $437 per metric tonne (pmt) over the period, compared with $362 pmt in Q1 2017 - representing a rise of $75, or 20.7 percent.

Bunker fuel consumption was 821,000 mt, up slightly on the 818,000 mt recorded during the same quarter last year.

Fuel consumption per thousand available lower berth days (ALBDs) was down to 40.1 mt from 40.9 mt in 2017.

2018 forecast

Below is Carnival's fuel price and fuel consumption forecast for 2018.

Second-quarter 2018 forecast

Fuel price pmt: $436
Fuel consumption (mt): 830,000

Full-year 2018 forecast

Fuel price pmt: $443
Fuel consumption (mt): 3,315,000

Key financial results

In its key results for Q1 2018, Carnival posted an increase in net income of $39m, or 11.1 percent, to $391m.

Q1 revenue amounted to $4,232m, which was $441m, or 11.6 percent, higher than the $3,791m achieved during the corresponding period in 2017.

Operating costs were also up - rising by $390m, or 11.4 percent, to $3,813m.

Carnival noted that the jump in bunker prices in Q1 (including realized fuel derivatives) had resulted in earnings declining by $0.04 per share, and that it had been offset by an increase in earnings due to changes in currency exchange rates of $0.04 per share.

Commenting on the results, Carnival's president and CEO, Arnold Donald, stated: "We are off to a strong start to the year achieving another quarter of record earnings on record revenues and exceeding the high end of guidance. This strong operational execution affirms our efforts to create demand in excess of measured capacity growth and exceed guest expectations once onboard."

On the company's outlook for 2018, Donald remarked: "The booking strength achieved during this year's wave season, outpacing even last year's record levels, demonstrates sustained strong demand for our world's leading cruise brands and delivers further confidence in our raised earnings guidance. We remain on track to achieve double-digit return on invested capital while continuing to return cash to shareholders through ongoing share repurchases and dividend growth."