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Carnival in party mood

Heavy spending aboard its vessels, as well as low fuel costs, have helped Carnival cruise to a strong set of numbers
December 21, 2015

A few extra cocktails help one glide better across the dance floor and they certainly helped profits at cruise operator Carnival (CCL). The business posted a 45 per cent rise in operating profits on the back of unexpectedly strong onboard spending and fuel costs flowing in the right direction. Encouragingly, ticket prices also rose as demand was in excess of capacity growth. Sales would have risen were it not for an unfavourable currency conversion to the tune of more than $800m (£537m). Chief executive Arnold Donald called it "one of our strongest years ever", as the company exceeded the high end of its guidance.

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Return on invested capital has now risen to 7.5 per cent - up from 4.5 per cent just two years ago - meaning the company is on course for its medium-term target of double-digits. This is likely to be helped by the arrival of four new vessels in 2016, which will include new features such as an outdoor ice rink and the first Imax cinema at sea, according to Mr Donald.

Management expects adjusted earnings per share of 310-340¢ for the 2016 financial year, compared with FY2015 adjusted EPS of 270¢. A degree of caution here owes to a small impact on consumer demand after this year's terror attacks.

CARNIVAL (CCL)
ORD PRICE:3,620pMARKET VALUE:£28.2bn
TOUCH:3,620p-3,626p12-MONTH HIGH:3,646pLOW: 2,745p
DIVIDEND YIELD:2.0%PE RATIO:24
NET ASSET VALUE:3,049¢NET DEBT:31%

Year to 30 NovTurnover ($bn)Pre-tax profit ($bn)Earnings per share (¢)Dividend per share (¢)
201115.81.91243100
201215.41.30167100#
201315.51.07139100
201415.91.23157100
201515.71.80226110
% change-1+47+44+10

Ex-div:tbc

Payment:tbc

£1=$1.49