Carnival Cruise ship Reports Record $2.8 Billion Profit in 2016

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Carnival Corporation, the world’s largest cruise ship company, posted a record $2.8 billion profit for its full fiscal year 2016 as the company looks towards another solid year for the cruise industry in 2017.

Carnival Corp. reported the record full year and fourth quarter earnings Tuesday. Carnival announced net income for the full year 2016 of $2.8 billion, or $3.72 diluted EPS, compared to $1.8 billion, or $2.26 diluted EPS, for the prior year.

Carnival Corp. said revenues for the full year 2016 were $16.4 billion, $700 million higher than the $15.7 billion in the prior year.

“We achieved the most profitable year in our company’s history as well as record fourth quarter earnings,” said Carnival Corporation & plc President and Chief Executive Officer Arnold Donald. “The continued execution of our core strategy to drive consumer demand in excess of measured capacity growth, contain costs and leverage our industry-leading scale resulted in our third consecutive year of significantly higher earnings and return on invested capital. The delivery of over $5 billion in cash from operations for our shareholders enabled increased dividend distributions reaching $1 billion and the investment of over $2.3 billion in the repurchase of Carnival Corporation stock.”

Highlights from the fourth quarter 2016 included the U.S. debut of Carnival Cruise Line’s Carnival Vista. Holland America’s Koningsdam also made its North American debut in November while Seabourn took delivery of ultra-luxury cruise ship Seabourn Encore.

During the quarter, Carnival Corp. also signed a memorandum of agreement with Meyer Werft for three new 180,000-ton cruise ships that will be powered by liquefied natural gas, the world’s cleanest burning fossil fuel. Two of the ships are for Carnival Cruise Line and are scheduled for delivery in 2020 and 2022. The third ship is designated for P&O Cruises (UK) and is scheduled for delivery in 2020. The company also signed an agreement with Shell to begin fueling its LNG-powered ships, starting with AIDA and Costa ships scheduled to launch in 2019.

Looking ahead, Carnival said it expects another solid year in 2017, forecasting adjusted earnings per share to be in the range of $3.30 to $3.60, compared to 2016 adjusted earnings per share of $3.45 in 2017.

“We are anticipating another solid year of operational improvement in 2017. Despite the unusual and significant impact of fuel and currency working against us simultaneously, the underlying strength in our fundamental business leaves us well positioned to achieve sustained double digit return on invested capital and to create continued value for our shareholders,” Donald added.

 

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A new report predicts that millennials and and first-time cruisers will book more cruise vacations in 2017. (Photo Courtesy: AFP Relaxnews/ nan104/istock)

What used to be considered a kind of travel reserved for senior citizens and retirees will become increasingly popular among an entirely different generation, with more millennials and Generation X travelers booking cruise vacations in 2017.

That's one of the predictions from the Cruise Lines International Association (CLIA) for 2017.

CLIA recently released an industry outlook of cruise trends, which estimates that an estimated 25.3 million passengers will set sail next year, up about 10 million from just a decade ago.

Likewise, next year will see 26 new ocean liners and river cruise ships make their maiden voyage, representing an investment of $6.8 billion in new vessels.

"From technological advancements and deployment of new ships to new ports and destinations around the world, the industry continues to respond to desires of today's travelers resulting in steady growth and strong economic impact around the world," said CLIA president and CEO Cindy D'Aoust in a statement.

And from 2017 to 2026, another 97 new cruise ships worth an estimated $53 billion are expected to hit the water.

Here's a snapshot of some of the cruise trends predicted for 2017:

New generation

Cruising isn't just for grandparents anymore. Citing a recent study which showed that millennials and Generation X travelers rated cruises higher than land-based vacations and all-inclusive resorts, CLIA experts anticipate that younger generations will embrace cruise travel more than ever.

Booking the old-fashioned way

Between 2015 and 2016, the use of travel agents increased nearly 80 percent, according to a report from the American Express Spending & Saving Tracker. CLIA experts expect that more and more cruisers will turn to the matchmaking services of travel agents next year.

River cruises

River cruises have become increasingly popular for offering shorter voyages with more port-of-call options. Next year 13 new river cruise ships are on order, representing an increase of seven percent.
More private islands

This year saw the historic crossing of the world's first luxury cruise ship through the Northwest Passage and the first cruise ship sailing between the US and Cuba in 50 years. In 2017, the cruise industry will try to entice travelers with more ports of call to private islands.

Virgin cruisers

The cruise industry's growth stems from rising demand. In another survey, nearly half of respondents who have never boarded a cruise ship expressed interest in taking a cruise in the next three years, while 85 percent of repeat cruisers said the same.