Carnival Corporation & plc ((CUK)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Carnival Corporation’s recent earnings call painted a picture of remarkable financial success tempered by caution due to external challenges. The company celebrated another quarter of record revenues, driven by robust booking positions and strategic destination launches. However, the management acknowledged potential hurdles, including geopolitical uncertainties and anticipated cost increases in the near future, alongside the initial yield impact from their new loyalty program.
Record Revenues and Financial Performance
Carnival Corporation reported its eighth consecutive quarter of record revenues, with significant growth across key financial metrics. EBITDA increased by 26%, operating income surged by 67%, and net income more than tripled compared to the previous year. Notably, EBITDA margins were 200 basis points higher than in 2019, marking the highest margins in nearly two decades.
Early Achievement of 2026 Targets
The company has impressively surpassed its 2026 financial targets 18 months ahead of schedule. This includes a 52% increase in EBITDA per ALBD and a 12.5% return on invested capital (ROIC). Additionally, Carnival has successfully reduced its carbon intensity by 20% compared to 2019, showcasing its commitment to sustainability.
Strong Customer Deposits and Booking Position
Carnival’s customer deposits have reached an all-time high, reflecting strong consumer confidence and demand. The booking position for 2026 aligns with last year’s record levels and is set at historically high prices, indicating a robust outlook for future revenues.
Successful Launch of New Destinations
The company is expanding its portfolio of private island destinations with the upcoming opening of Celebration Key in July 2025 and the expansion of Relax Away Half Moon Cay by mid-2026. These new offerings are expected to enhance Carnival’s appeal and drive further growth.
Geopolitical Instability Concerns
While the conflict in the Middle East poses potential risks, Carnival has not yet observed any immediate impact on its business operations. The company remains vigilant and prepared to address any challenges that may arise from geopolitical instability.
Higher Cruise Costs in Q3 2025
Carnival anticipates a 7% year-over-year increase in cruise costs per ALBD in Q3 2025, excluding fuel expenses. This rise is attributed to new destination operating expenses and lower capacity, which the company is strategically managing.
Potential Impact of New Loyalty Program
The introduction of the Carnival Rewards loyalty program in June 2026 is expected to initially impact yields negatively due to revenue deferral. However, the company projects a positive yield impact from the program after two years, highlighting its long-term strategic value.
Forward-Looking Guidance
Looking ahead, Carnival Corporation remains optimistic about its financial trajectory. The company anticipates further yield growth and plans to set new targets for 2025, supported by strong booking positions and high prices. Strategic marketing and investment initiatives are expected to bolster this growth, ensuring continued success.
In summary, Carnival Corporation’s earnings call highlighted a period of exceptional financial performance, with record revenues and early achievement of long-term targets. While external challenges such as geopolitical uncertainties and rising costs present potential obstacles, the company’s strategic initiatives and strong market position provide a solid foundation for future growth.