Carnival's Fourth Quarter Earnings Report

Carnival (NYSE:CCL) announced its results for the fourth quarter on December 20, 2012. Carnival is a cruise and vacation company operating in the United States and internationally.

A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: 5 Tricks Companies Use During Earnings Season

The Numbers: Carnival's revenues topped expectations, though the company's EPS fell short of predictions. The company reported adjusted net income of 13 cents per share versus the $1.47 per share estimate and revenues of $3.58 billion versus the $3.55 billion estimate. Revenue fell 3.2% from the same period last year. Carnival's net income for the fourth quarter fell 57.1% from last year's figures to $93 million.



Management Quote: Commenting on full year 2012, Arison stated, "As a result of the Costa Concordia tragedy in January, the past year has been the most challenging in our company's history. However, through the significant efforts of our brand management teams, we were able to maintain full year 2012 net revenue yields (excluding Costa) in line with the prior year. In addition, we drove down net cruise costs, excluding fuel, slightly and fuel consumption by four percent." Arison added that unfavorable changes in fuel prices and currency exchange rates reduced earnings by $300 million, or $0.39 per share, compared to the prior year. Arison noted, "Cash from operations of $3.0 billion was more than sufficient to fund $1.8 billion in net capital investments and positioned the company with excess free cash flow to return to shareholders. Our regular quarterly dividend of $0.25 per share, combined with our recently announced special year-end dividend of $0.50 per share, will result in $1.2 billion of dividend distributions to our shareholders. Additionally, since the start of the fiscal year we purchased 3.5 million of the company's shares in the open market at a cost of $120 million."



Looking Ahead: Next quarter's results are expected to be more favorable for the company. Over the past 60 days, the average estimate for the first quarter of the next fiscal year has reached 19 cents per share, up from 9 cents. When analyst increase earnings estimates investors can assume business has been stronger than first thought and is an encouraging sign for investors. At $1.88 per share, the average estimate for the fiscal year has risen from $1.62 60 days ago.