Interesting info about Princess and rest of Carnival Corp.

[caribill]

At today’s phone conference with stock analysts to discuss the most recent quarter’s earnings report, there was some interesting information about Princess as well as the other brands that Carnival Corporation owns.

o Advertising costs (including all brands) is up 14% in the past year. The recent Princess advertising campaign was after two years of no advertising for Princess.

o Earnings have been affected by the additional marketing costs

o The Galveston Ship Channel oil spill will have about a 1 cent/share effect on earnings if the channel reopens this week. Much of the costs involved are expected to be recovered later in the year from insurance and those responsible for the spill. Three ships are currently affected (the CB and two Carnival ships).

o The situation in Ukraine has only affected Costa itineraries so far with a May sailing replacing Ukraine with a stop in Bulgaria and an overnight in Istanbul. No changes in place for third quarter sailings on any of the brands (including Princess), but they could happen. Itineraries that call in Ukraine represent about .7% of Carnival Corp capacity.

o The two ships that will be based in Japan part of the time (obviously both Princess) represent about 1% of Carnival Corp capacity. There is slower than expected demand growth in the Japanese market. It is growing, but “somewhat less than anticipated.”

o Overall, Carnival Corp bookings are at a higher rate than last year but with lower pricing overall. Although at a higher rate, it is still at the lower end of historical booking rates.

o Alaska itineraries are being booked at a higher rate than last year, also with lower pricing. However the higher number of current bookings means higher pricing is expected to be in place on the remaining inventory.

o The Caribbean is challenging because there is a 19% industry capacity increase in that area this year. There is little or no capacity increase expected there next year.

o Bookings are recovering from the ship incidents at Carnival and Costa but have not yet recovered to the 2008 level of yields. Costa bookings are adversely affected by the current European economy. Costa represents about 15% of Carnival Corp capacity.

o Management is not worried that consumers are getting used to lower pricing.

o Lower pricing and its effect on the three main categories of passengers:

With lower pricing, loyalists to a brand may take an extra cruise or two.

New cruisers are often attracted to Carnival brands based on price.

Switchers (those loyal to other brands) are the hardest to attract and lower pricing helps.

o Carnival Corp spends $1.3 billion a year on crew travel (airfare, hotels) as is looking to save money in this area.

o Cruising is the “greatest vacation value there is.”

Edited March 25, 2014 by caribill

[OCruisers]

Caribill ... Great summary of the conference call. Thanks for doing this. :)

LuLu

~~~

[hillslife]

Great info..nice synopsis...thanks for sharing:p

[Pam in CA]

Thanks for the great info.

[Roses2]

Thanks for posting the information. As a long time investor in the cruise industry, I still believe it is a relatively solid sector for long term investment. Your information bolsters that belief. Any time Carnival drops into the lower 30s we see it as a buy.

[Pythian]

Thanks Caribill - I'd seen the stock took a hit today (down about 5% at noon) and was wondering what was disclosed / discussed this morning. This was a really good overview and makes me think the market is just reacting to a general saturation in the cruise market. I'll do what Carnival suggests and take an additional cruise on Princess this year and enjoy the price benifit.

[rpbanks]

Stock down over $2 a share

[CruzinNoony]

Thanks for taking the time to post this interesting information.:)

[caribill]

Thanks Caribill - I'd seen the stock took a hit today (down about 5% at noon) and was wondering what was disclosed / discussed this morning. This was a really good overview and makes me think the market is just reacting to a general saturation in the cruise market. I'll do what Carnival suggests and take an additional cruise on Princess this year and enjoy the price benifit.

 

The "hit" was due to the earnings press release which had slightly lower estimates for the next quarter's earnings as well as the full year.

 

For all stocks, the market usually reacts more than warranted to small changes in results or estimates when compared to what analysts were expecting.

[AE_Collector]

o Carnival Corp spends $1.3 billion a year on crew travel (airfare, hotels) as is looking to save money in this area.

 

Thanks fur the report Caribill!

 

I wondered about the cost of transportation of employees. I heard a good example of this talking with a guitar player from Florida on a recent cruise. He was done a 7 month "gig" as we arrived in Florida on a trans Atlantic. He said they had him tentative to get on that ship as it did the east bound TA but couldn't get their act together to get him onboard as it left Florida for the Mediterranean. Just after it left they finalized his contract and had to fly him to either the Canary Islands or the Azores where something went wrong and he missed the ship so they again had to fly him to the next stop.

 

All I could think as a shareholder is what were they thinking when he wanted to step onboard right where he lives in Florida but they thought nothing of spending thousands of dollars to get him to the ship!

 

o Cruising is the “greatest vacation value there is.”

 

Absolutely!

 

Terry

Edited March 25, 2014 by AE_Collector

[A1A]

Thanks Carbill

Appreciate the summary, great info and very informative!

Ken

[ontheweb]

Did they extend the stockholder's OBC benefit for another year?

[greenie082756]

As a future CCL stockholder thank you for posting the summary of the meeting. Thanks! :)

[beg3yrs]

Did they extend the stockholder's OBC benefit for another year?

 

Shareholder OBC benefit extension is not generally announced during a stock analyst conference call. However, the benefit was recently extended for another year.

[guxu]

They mentioned "Lower pricing" a lot. But did you guys see lower pricing? I cruise every year. I did not see lower pricing at all. I can only cruise in peak seasons (spring break, summer, Xmas/New Year). Maybe they lowered price in non-peak seasons?

[ischeer]

Did they extend the stockholder's OBC benefit for another year?

 

Yes, they did extend it for sailings through 31 July 2015

[gelo7]

Thanks, for sharing.

[Happy2cruise]

Interesting....thanks for posting!

[cnd crsr]

Thank you for passing on this information, Caribill.

[Working 2 Cruise]

Very interesting information! Thank you Caribill. I guess we won't be seeing last year's fabulous sales price on Alaska cruises!

[Kenswing]

Nevermind.. :o

Edited March 25, 2014 by Kenswing

[RickEk]

Very interesting information! Thank you Caribill. I guess we won't be seeing last year's fabulous sales price on Alaska cruises!

 

You never know... :)

[caribill]

Shareholder OBC benefit extension is not generally announced during a stock analyst conference call. However, the benefit was recently extended for another year.

 

It is always announced in the Annual Report which came out at the end of February or beginning of March.

[Go-Bucks!]

Thanks for the info. I was wondering why my stock price dropped 4.95% today! :( But I'm "ahead" anyway and love my OBC.

[cruisequeen4ever]

That was interesting! Makes me want to invest just to get the insider info.!

 

 

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