Tag Archives: carnival sunshine

Cruise shipbuilding versus ship refurbishments

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Cruise Ship Building yardUnlike the scheduled cruise ship refurbishments, major refits may include even a cruise ship lengthening, like in the case of Royal Caribbean ship Enchantment of the Seas lengthened in 2005 (see the photo below). The Enchantment ship lengthening cost ~ US$55 million, it was a process of cutting the ship in two and inserting a whole new 73 ft (22 m) 3,500 tons midsection, pre-built at the Aker Finnyards. The month-long dry-dock at the Keppel Verolme shipyards (Rotterdam, The Netherlands) resulted in adding 151 brand new cabins, a 50% bigger Pool Deck area, a new kids area, a teen center, several new bars and lounges, an expanded main dining room, a new specialty restaurant. This “refurbishment cost” record was recently beaten by the CCL line and the US$155 million Carnival Destiny refit 2013 producing a brand new ship named Carnival Sunshine!

The average cost of building a cruise ship is around US $450 for mid-sized vessels and up to $800 million for bigger cruise ships. These prices, along with the current economy status force many cruise lines to hold off from building new ships – the biggest expense of all. As a rule, all new cruise ships on order/currently under construction are by contracts signed years ago when the dollar had a good rate.

cruise ship builders and refurbishment companies (firms)Cruise ship building prices are high enough to not meet the return requirement. Even the mighty Carnival Corporation (the largest cruise company in the world) puts its ship building plans on hold. Royal Caribbean is one of the few companies continuing to place orders for new ships – and not any ships, but the ever largest, the most innovative, the most expensive in the world. Still, most passenger ship lines are trying to keep their current fleet fresh and good looking. Two of the best examples are Holland America with its $450 million SOE program for ship renovations, and Carnival investing over $250 million to fully refit and refurbish 8 of its oldest vessels.

Carnival Corp. records $222 million in net income in Q2

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Carnival Corp. reported $222 million in net income in the second quarter, up more than 126% from second quarter 2014. Revenue for the quarter, the company said, was $3.6 billion, compared with $3.63 billion in 2014.

Carnival said its net income in the quarter included unrealized gains on fuel derivatives of $34 million and $7 million on restructuring expenses.

Net revenue yields rose 4.1% in the quarter on a constant-dollar basis, beating the company’s estimate of increases in the 2% to 3% range; gross revenue yield decreased 3.5% due to changes in currency exchange rates, it said.

Fuel prices declined 37%, to $411 per metric ton; the company spent $333 million on fuel in the quarter, compared with $527 million in Q2 2014. Net cruise costs, excluding fuel, increased 6.1%, which the company primarily attributed to an increase in drydock days.

Carnival Corp. CEO Arnold Donald said in the earnings statement that all company’s North American brands “enjoyed strong revenue yield improvement”; he singled out the Carnival Cruise Line brand and said it “performed particularly well again this quarter.”

The company said that fleetwide booking volume for the next three quarters was running “well ahead” of last year, at slightly lower prices due to transactional currency impacts. Donald said that the strong booking volume “clearly demonstrates strong consumer demand for our brands,” and he added that Carnival Corp. would step up marketing investment for the remainder of the year.

Carnival said its third-quarter net revenue yields were expected to be up 2% to 3% in constant dollars compared with Q3 2014.

This report was updated to clarify a statement from Arnold Donald regarding yield improvement in the company’s cruise brands.

Carnival Corporation reports strong Q1 profits

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By Hollie-Rae Merrick

Carnival Corporation reports strong Q1 profits Carnival Corporation has reporter stronger-than-expected earnings for the first quarter of 2015.

The cruise company made a net profit of $49 million, or $0.06 diluted earnings per share in the last quarter, compared to a net loss of $20 million in the last year period.

It attributed its strong earnings to a rise in onboard revenues which were up 8% compared to 2014. Onboard spending rose to $889 million from $850 million, although revenue from ticket prices dropped around 3.5%.

Net revenue yields increased 2% in the first quarter of 2015, better than the company’s December guidance of up to 1%. However, gross revenue yields dropped 3.1% due to changes in currency exchange rates.

Looking ahead to 2015, Carnival Corporation said advance bookings were ahead of 2014 and at higher prices.

Chief executive and president 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% higher than prior year (constant dollar).

“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.”

Donald said he believed results had improved off the back of “ongoing public relations efforts and creative marketing campaigns” designed to attract new customers. He referenced the success of the company’s Super Bowl advertising campaign which generated five billion impressions online before the ad had even run on TV.

He added: “Consistent with many global companies, the strengthening of the US dollar has hampered our full-year earnings expectations, masking the 3% to 4% (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.”

Folllowing a strong start to the year with bookings, Carnival said it expects full-year 2015 net revenue yields to increase 3% or 4% compared to 2014 and one point better than previous guidance for the year ahead.

However, changes in currency exchange rates means full-year 2015 earning expectations have been reduced by $219 million. Carnival said this was offset by an improvement in the company’s operating performance.