Carnival Corporation (NYSE:CCL) reported net income of $396.2 million on revenues of $1.23 billion for its third quarter ended August 31, 2000, compared to net income of $415.1 million on revenues of $1.16 billion for the same quarter in 1999.
Net income for the nine months ended August 31, 2000, was $771.7 million on revenues of $2.93 billion, compared to net income of $776.2 million on revenues of $2.71 billion for the same period in 1999. The company's higher revenues during the third quarter of 2000 were primarily driven by an 11.3 percent increase in cruise capacity provided by Carnival Cruise Lines' 2,758-passenger Carnival Triumph, launched in July 1999; and Holland America Line's 1,440-passenger Volendam and Zaandam, introduced in November 1999 and May 2000, respectively.
Carnival Corporation Chairman and CEO Micky Arison noted that operating results were largely in line with expectations given the continued pressure on cruise pricing, significantly higher fuel costs and the loss of five seven-day cruises due to the unscheduled drydock of Carnival Cruise Lines' Paradise. Despite these conditions, cruise operating earnings grew by $4.8 million in the third quarter compared to the same period in 1999. Arison also pointed out that the company has carried close to 2 million passengers in the first nine months of 2000 compared to 1.75 million for the same period in 1999.
Looking ahead, Arison said the fourth quarter of 2000 appears to be shaping up as expected with continued pressure on pricing, although comparisons with prior year net revenue yields may be somewhat better than third quarter comparisons. Higher fuel costs are also expected to impact the fourth quarter. For fiscal 2001, Carnival's cruise capacity is expected to grow 11.5 percent, excluding Costa. Providing an early glimpse into fiscal 2001, Arison indicated that he is encouraged by strengthening booking trends during recent months, which may suggest the company has reached a bottom in cruise pricing.
"If these stronger booking trends continue, we are optimistic that we will start to see positive earnings growth for the full fiscal year 2001," he added. "However, largely because of the unusually high-priced millennium sailings in the first quarter of this year, net earnings for the first fiscal quarter of 2001 are expected to be lower than this year's first quarter." Arison also said that the company expects to close on the purchase of the remaining 50 percent interest in Costa Crociere, Europe's leading cruise company, from Airtours, plc within the next two weeks. "Carnival's 100 percent ownership of Costa is expected to give the company the platform for further expansion into the European marketplace, one of the fastest growing cruise markets in the world," Arison said.
In February 2000, Carnival's board of directors authorized the repurchase of up to $1 billion of its common stock. Through Sept. 20, 2000, Carnival has repurchased approximately 33.1 million shares of its common stock at a cost of $705 million. Given the company's planned purchase of the remaining 50 percent of Costa and management's desire to maintain a strong balance sheet and strong liquidity, the company does not anticipate repurchasing additional shares of its common stock in the near future.
Carnival Corporation is comprised of Carnival Cruise Lines, the world's largest cruise line based on passengers carried, Holland America Line, Windstar Cruises, Cunard Line Limited, which operates the Cunard and Seabourn cruise brands, and interests in Costa Crociere and Airtours plc. Combined, Carnival Corporation's various brands operate 48 ships in the Caribbean, Alaska, Europe and other worldwide destinations.
