Will lower Carnival Corp. earnings affect the HAL experience?

[whogo]

MIAMI (May 20, 2013) -- Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) today announced that it has updated earnings guidance for the second half of 2013, primarily due to lower net revenue yield expectations.

Current cruise ticket pricing for the company has driven higher booking volumes however, at the same time, it has led to lower than anticipated net revenue yields which has resulted in reduced earnings guidance.

The company now expects full year 2013 net revenue yields to be down 2 to 3 percent compared to the previous flat yield guidance for the year. In addition, voyage cancellations beyond those incorporated in the company’s previous earnings guidance, as well as increased selling and administrative costs, are expected to reduce earnings by approximately $0.10 per share.

Based on the above factors, as well as current fuel prices of $674 per metric ton and currency exchange rates of $1.30 to the Euro and $1.53 to the pound, the company now expects full year 2013 EPS to be in the range of $1.45 to $1.65 compared to its previous earnings guidance range of $1.80 to $2.10. The company continues to expect second quarter 2013 EPS to be in the range of $0.04 to $0.08 per share despite slightly lower yield expectations.

The company will announce second quarter results and more details of its 2013 full year guidance (updated for current spot prices for fuel and exchange rates) during its regularly scheduled earnings conference call to be held in late June 2013.

Carnival Corporation & plc is the largest cruise company in the world, with a portfolio of cruise brands in North America, Europe, Australia and Asia, comprised of Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, P&O Cruises (Australia) and P&O Cruises (UK).

Together, these brands operate 101 ships totaling 205,000 lower berths with eight new ships scheduled to be delivered between May 2013 and April 2016. Carnival Corporation & plc also operates Holland America Princess Alaska Tours, the leading tour company in Alaska and the Canadian Yukon. Traded on both the New York and London Stock Exchanges, Carnival Corporation & plc is the only group in the world to be included in both the S&P 500 and the FTSE 100 indices.

http://phx.corporate-ir.net/phoenix.zhtml?c=140690&p=irol-newsArticle&ID=1822549&highlight=

 

Low ticket prices, higher cancellations, and higher selling and administrative costs are bad news for Carnival Corporation. Will more cost cutting be necessary at Holland America to help the bottom line?

[Gail & Marty sailing away]

I hope not ..

[Krazy Kruizers]

It all depends on what your expectations are.

[Keith1010]

I don't think so.

 

Keith

[sail7seas]

I join those who 'hope not'.

 

 

It's basic arithmetic.

How much is the gross revenue for a given sailing?

How much can they spend on expenses for that sailing?

They are a for profit business.

 

Pay less; get less.

[cruz chic]

I'm still waiting to pay less. So far it's not happening.

[Sir PMP]

" Will lower Carnival Corp. earnings affect the HAL experience?"

 

Yes, big time...

[cruisin'girl]

I'm still waiting to pay less. So far it's not happening.

Th big question is how long people who are not paying less will continue to accept getting less. Carnival is like so many corporations now- short term profits are pretty much all they care about to make the stockholders happy and keep their jobs. Not always the best thing for the long tern picture though.

[whogo]

It is not a good sign. I don't foresee service or amenities improving and fear they may get worse.

[wander]

Oh but we are paying less in terms of present day dollars, quite a bit less. For a similar cabin we now pay just slightly more than we did 10 years ago which means in terms of today's prices (or dollars) it is a lot less. At least that is true for outside cabins with windows. I do not know about deluxe suites or the PH.

[sammygoose]

All good points.

 

but.....it may make CCL re-evaluate under performing areas of their ships to increase profitability. For example maybe Caneletto dies a quick death and a new offering emerges. Maybe the sports bar that shows cricket all day actually markets to their North American audience and shows more NHL,NFL NBA,MLB games. I know I'd be more willing to buy a beer or 2 if I was on a cruise and watch a game I actually care about.

Maybe they re evaluate their wine lists and delete nonperforming wines and add new ones. Especially regional wines in the areas they are cruising.

You can only cut so many MDR and housekeeping and maintenance positions before you are in a death spiral.

Also they will and are evaluating ship positioning to take advantage of hot markets(Australia) and cold markets(Europe). Carnival will have no ships in Europe in 2014 as an obvious example.

I know that Carnivals gaffes have hurt the bottom line but there will always be the 3-4 day closed loop cruises by Carnival that are highly profitable due to alcohol sales.

I suspect a bounce back in 2014 when most of these losses are written off. CCL is just warning the market to avoid wild share sell offs and market fluctuations.

Perhaps HAL will also have to re-evaluate their flash sales after final payment and adopt a better policy of better pricing further out like Princess and Carnival?

Maybe all of this is not such a bad thing. These cruise lines are very profit focused..............

[Richie2pies]

Things on HAL are certainly not going to get better. Expect more cutbacks and less quality in the food and other items.

[swedish weave]

I would not get too concerned about this announcement.

 

The company is spending 700 million dollars to upgrade the back up power systems and to redo the ship power systems to avoid future events like they experienced on some of the ships.

 

The economy plus the media blitz will soon change and all the cruise lines can get back to business as usual. Carnival Corp didn't get to be the biggest in the world by mismanaging the company, and they may make some changes that some people don't like, but in time will get back to providing a good vacation for a fair price.

 

An example is NCL. They were on a slippery slope a few short years ago, and made unpopular changes, but are now providing a very nice vacation at a good price.

 

I believe Carnival Corp will do the same in shorter time.

[iancal]

HAL will no doubt have quarterly goals-measured against best in class performance. These will include many sub goals but the key ones will be the quarterly revenue, margin, profit, and growth goals.

 

If HAL management misses these quarterly goals by a large margin, or if they miss the quarterly goals in two successive quarters, you can be sure that the parent Carnival will offer some 'head office assistance'. In such a case, the help would probably include cost control measures.

 

The old maxim 'if you do not make your revenue/profit numbers then you better be under on your expense line' probably prevails at Carnival Corp as it does in many other companies.

 

So yes, IMHO, if HAL's numbers are below the goalpost you can expect to see cuts that will invariably impact customers.

[Sir PMP]

I would not get too concerned about this announcement.

 

The company is spending 700 million dollars to upgrade the back up power systems and to redo the ship power systems to avoid future events like they experienced on some of the ships.

 

The economy plus the media blitz will soon change and all the cruise lines can get back to business as usual. Carnival Corp didn't get to be the biggest in the world by mismanaging the company, and they may make some changes that some people don't like, but in time will get back to providing a good vacation for a fair price.

 

An example is NCL. They were on a slippery slope a few short years ago, and made unpopular changes, but are now providing a very nice vacation at a good price.

 

I believe Carnival Corp will do the same in shorter time.

 

 

Dream on baby..

[swedish weave]

Dream on baby..

 

Do you not wish to submit your ideas on this subject. It serves no purpose to poke "one liners" at those who do.

[Sir PMP]

Do you not wish to submit your ideas on this subject. It serves no purpose to poke "one liners" at those who do.

 

Ceo Mickey has no interest at all to keep the levels up of all divisions, you saw that last year with all the problems Carnival had, he never showed up once to investigate all the violations, the only way HAL can survive is to split off together with Cunard from Carnival..

[George C]

We saw several cuts on our Maasdam cruise, that string group from 4 to 2?? but they sounded great anyhow. Triva prizes are now pins that must cost Hal about a dime. But over all it was still a great cruise, in general quality of food was very good, so was entertainment.

[swedish weave]

Ceo Mickey has no interest at all to keep the levels up of all divisions, you saw that last year with all the problems Carnival had, he never showed up once to investigate all the violations, the only way HAL can survive is to split off together with Cunard from Carnival..

 

HAL and Cunard couldn't make it on their own before Carnival took them in. How can they manage to survive alone, now ???

 

Arison has staff to handle the business, and Cahill was in Mobile when the broken ship arrived.

 

Arison is managing the largest cruise company in the world. Who are we to criticize his style or methods?

[Sir PMP]

HAL and Cunard couldn't make it on their own before Carnival took them in. How can they manage to survive alone, now ???

 

Arison has staff to handle the business, and Cahill was in Mobile when the broken ship arrived.

 

Arison is managing the largest cruise company in the world. Who are we to criticize his style or methods?

 

Sorry, but times have changed, Hal and Cunard can make a great classy cruise company together, compared to a meatpacker house like Carnival that ignores it passengers..

[innlady1]

We saw several cuts on our Maasdam cruise, that string group from 4 to 2?? but they sounded great anyhow. Triva prizes are now pins that must cost Hal about a dime. But over all it was still a great cruise, in general quality of food was very good, so was entertainment.

 

I'm one who actually prefers the Adagio duo...we really enjoyed them on the Ryndam this winter.

[swedish weave]

Sorry, but times have changed, Hal and Cunard can make a great classy cruise company together, compared to a meatpacker house like Carnival that ignores it passengers..

 

Many "classy" cruise companies have gone under. Class doesn't pay the bills, and that is what keeps cruise lines in business.

 

Sitmar was once considered one of the best, and they went under and were taken over by Princess who was then absorbed into the Carnival family.

 

Carnival is a successful company and they are keeping some of the others in business.

 

It is not necessary to like Carnival, but we should thank them for keeping the other lines available for us to enjoy.

[DaveOKC]

Having spent my entire career in retail, dealing closely with the public, I have a couple of different thoughts on this topic.

 

First, if the problem (reduced demand) is a long term one in CCL's opinion, then we will see some significant cutbacks in quality and service levels.

 

If they view it as a short term issue (which I personally think it is) you could actually see CCL offering a better product short term to attract back the consumer.

 

I saw this in Vegas post 9/11, for several years. The casinos were hurting, so they lower hotel and food prices, gave us better gambling odds, and even better service. Once things got back to near normal, they started increasing prices, reduced the gambling odds and let service levels slip.

 

Both of these industries have alot in common, especially high fixed costs, high labor expenses and offering a product that is not a necessity. So I bet CCL will follow the lead of the Vegas casinos and improve their offering.

 

DaveOKC

[Sir PMP]

Having spent my entire career in retail, dealing closely with the public, I have a couple of different thoughts on this topic.

 

First, if the problem (reduced demand) is a long term one in CCL's opinion, then we will see some significant cutbacks in quality and service levels.

 

If they view it as a short term issue (which I personally think it is) you could actually see CCL offering a better product short term to attract back the consumer.

 

I saw this in Vegas post 9/11, for several years. The casinos were hurting, so they lower hotel and food prices, gave us better gambling odds, and even better service. Once things got back to near normal, they started increasing prices, reduced the gambling odds and let service levels slip.

 

Both of these industries have alot in common, especially high fixed costs, high labor expenses and offering a product that is not a necessity. So I bet CCL will follow the lead of the Vegas casinos and improve their offering.

 

DaveOKC

 

Sorry, but having spent my entire career in retail and wholesale also, I believe it's going down and in a hurry, if you have the ceo of carnival so disinterested in his own passengers (his business) I feel that the end is near for his cruise industry, Carnival is no longer a leader, other companies like NCl, Celebrity etc. are passing him up; by copying them, launching a few big ships instead of finding the niche of mid size ships (1800 pax) where the demand is, ships that can hit small ports worldwide, some agency told him to look at tonnage and square footage, the old retail disease will start to hurt him..

[Tarpeian Rock]

HAL and Cunard couldn't make it on their own before Carnival took them in. How can they manage to survive alone, now ???

 

Arison has staff to handle the business, and Cahill was in Mobile when the broken ship arrived.

 

Arison is managing the largest cruise company in the world. Who are we to criticize his style or methods?

 

 

 

 

Given that Arison has refused to be the public face of his company in any venue besides a basketball court, it's unclear just how much management - apart from watching the financials - he's actually doing. When a car company or pharmaceutical company screw up, the CEO gets out there and does public damage control. Arison's lack of that implies contempt for his customers. And as the people who pay his bills, I would say we're more than entitled to criticize his methods.

 

Not coincidentally, we're calling Oceania this week for our 2014 cruise.