27th Mar 2023 17:08
(Alliance News) - Carnival PLC on Monday posted a narrowed net loss for the first quarter of 2023, with business "booming", according to Hargreaves Lansdown, but the cruise ship firm as a lot of ground to recover.
Carnival said its net loss in the first quarter ended February was USD693 million, narrowing from USD1.89 billion a year earlier.
This was also slimmer than its previous guidance from December of between USD750 million and USD850 million.
Hargreaves Lansdown analyst Derren Nathan said the better-than-expected outcome was driven by increased pricing, growth inboard sales and higher-than-expected occupancy.
Carnival also swung to adjusted earnings before interest, tax, depreciation and amortisation of USD382 million from a loss of USD962 million a year earlier.
Revenue was USD4.4 billion, representing 95% of 2019 levels, Carnival said.
"Business is booming at Carnival. Its ships are set to be full this summer and it looks well set to return to cash generation even after its weighty capital expenditure and debt financing bills," Nathan said.
"That's not to say it's all plain sailing though, with fuel and currency headwinds still taking some wind out of its sails. The record booking season is just as well because at the last check Carnival's net debt stood at USD30.5 billion. That's nearly three times the value of Carnival's total market value, meaning that for now, it's very much debt holders who influence Carnival's course. Although Carnival is hopeful of generating free cash flow this year, it could be a long while before that balance to be redressed in shareholder's favour."
Nathan also noted Carnival generated positive USD388 million of cash from operations in the quarter.
"That's before USD1.1 billion of capital expenditures, USD700 million of debt repayments and USD500 billion of interest expenses," Nathan continued, labelling it a "record quarter" for booking in North America, Australia and Europe.
Looking ahead, Carnival expects adjusted Ebitda to be between USD3.9 billion and USD4.1 billion across 2023, while in the second quarter, it expects a 57% to 83% rise to between USD600 million and USD700 billion from the first quarter.
It described expected second quarter performance to be a "significant improvement" from the first quarter.
Nathan added: "Carnival is well-placed to have a good year, but it needs to have a few in a row to make a dent in its debt pile. And with consumers under pressure from all angles, that could still be a big ask."
By Greg Rosenvinge, Alliance News reporter
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