Carnival Corporation has reported unprecedented earnings for the third quarter of 2023 in a remarkable show of resilience. The results beat all prior predictions and set the cruise company on a solid path for future growth.
With few new ships on the program except Carnival Jubilee, two Princess cruise ships, and one Cunard ship, Queen Anne, Carnival Corporation has time and money at its hand to bring down the massive mountain of debt it has accumulated over the last three years—something it is doing with considerable success.
Strong Third Quarter Performance
Carnival Corporation, which owns and operates nine different cruise brands, has released its financial results for the third quarter of 2023.
The company has reported a total revenue of just over 6 billion, a net income of $1.07 billion, and an adjusted net income of $1.18 billion for Q3. This far exceeds the guidance the company released in the second quarter outlook in June.
The adjusted EBITDA has also surpassed expectations, clocking in at a remarkable $2.22 billion. These figures underscore a trend of increased earnings we have seen from the cruise company over the last year, and which marks a promising phase for Carnival.
Carnival Corporation’s CEO, Josh Weinstein, said: “We delivered over $1 billion to the bottom line with revenue reaching an all-time high. Both revenue and earnings significantly exceeded expectations this quarter enabling us to take up expectations for the year.”
Bookings Surge for All Carnival Brands
Bookings surged during the third quarter of 2023, marking a period of robust growth that exceeded previous records. According to Weinstein, the booking volumes were running nearly 20% above the record-breaking year 2019.
While the US Market has been performing strongly since the start of operations post-pandemic, the increased level of guests booking cruises wasn’t confined to just one market; both North American brands such as Princess Cruises, Holland America Line, and Carnival Cruise Line and European brands such as AIDA and Costa saw significant demand, reverting to pre-pause levels in Europe.
“We are maintaining strong momentum and continuing to build demand through our improved commercial execution. Booking volumes during the quarter were running nearly 20 percent above 2019 levels and multiples of our capacity growth, which has continued into September.
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“This has helped us extend the booking curve even further, with our North American brands exceeding historical highs and our European brands essentially achieving pre-pause levels,” said Weinstein.
The data also revealed that the booked position for 2024 exceeds historical ranges at higher prices.
Weinstein highlighted that this trend aligns well with the company’s strategy: “Our booked position for 2024 is further out than we have ever seen and at strong prices. With less remaining inventory to sell, despite a five percent increase in capacity, we are well positioned to drive pricing higher and deliver strong yield improvement in 2024.”
Looking Ahead to 2023
For 2023, Carnival expects adjusted EBITDA to come in just shy of $4.2 billion. The company also projects net per diems to increase approximately 7.0% compared to 2019. And with booking levels where they are now, ships are expected to sail at 100% occupancy rates or higher for the year.
However, the best piece of news is the fact that Carnival has started chipping away at the vast mountain of debt it has accumulated over the last couple of years.
David Bernstein, Carnival Corporation & plc Chief Financial Officer: “We are accelerating our debt repayment efforts and aggressively managing down our interest expense. In just the last six months, we have reduced our debt balance by over 10 percent or nearly $4 billion. With improving performance, growing operating cash flows and $5.7 billion of liquidity, we are on a path to end the year with less than $31 billion of debt.”
With just four news ships on the horizon; Carnival Jubilee, Cunard Line’s Queen Anne, Princess Cruises’ Sun Princess (all three due in 2024), and Star Princess (expected 2025), Carnival Corporation has set itself up for a period of consolidating its financial growth without introducing additional risk factors.
While there has been a negative vibe around Carnival Corporation’s financial position since the pandemic, it seems that Josh Weinstein has found the magic formula to bring the world’s largest cruise company back on top.
However, as we’ve seen in 2020, it takes one major event to bring havoc to the cruise industry, and it would be interesting to see how Weinstein plans to protect his company from potential events in the future.