PHOTO: If Cuba opens to travel, it represents a big opportunity for the cruise industry. (Photo by David Cogswell)
Carnival Corp. CEO Arnold Donald says Cuba represents a "tremendous opportunity" for cruising if the trade embargo is lifted.
"There's a lot of pent-up demand to visit Cuba," he said during a conference call with analysts to discuss fourth-quarter and full-year earnings.
He noted that an open Cuba would allow cruise lines to create "very fuel-efficient" itineraries since they would no longer have to sail around the 780-mile-long island on the way to other Caribbean destinations.
There are 11 potential ports of call in Cuba, he said, which would give people another reason to take Caribbean cruises.
Havana has a relatively shallow draft, he said, which might preclude large mega-ships from visiting, but Carnival Corp. has vessels that would be the right size among its nine brands.
"There will be investment in ports and infrastructure required over time," Donald said. "We are excited about the prospects. It could definitely create the demand that we need to have the relative scarcity to drive yields."
Meanwhile, Carnival Corp. reported non-GAAP net income for full-year 2014 of $1.5 billion, or $1.96 earnings per share, compared to $1.2 billion, or $1.58 earnings per share, last year. Full-year 2014 U.S. GAAP net income was $1.2 billion, or $1.59 earnings per share, compared to $1.1 billion profit and $1.39 per share in 2013. Revenues for the full year 2014 were $15.9 billion compared to $15.5 billion for the prior year.
"Full-year earnings were significantly higher than the prior year primarily due to strong profit improvement at both our Carnival Cruise Lines and Costa Cruises brands," Donald said in a press release. "We enjoyed some early wins from our collaboration efforts that contributed to our improved results, particularly for onboard revenues. We worked hard to contain costs and achieved an almost 5 percent reduction in fuel consumption for the year as we continue to implement energy conservation measures. We also made a number of strategic decisions in fleet investments that will position us well for the future."
Fourth-quarter operating profit more than doubled due to higher ticket prices and onboard spending combined with the cost savings, he said.
Looking toward 2015, cumulative advance bookings for the first three quarters are ahead of the prior year at slightly higher prices. Since September, booking volumes for the first three quarters are running ahead of last year's levels at slightly lower prices driven by transactional currency impacts, the company said.
The company forecasts full-year 2015 non-GAAP diluted earnings per share to be in the range of $2.30 to $2.60, compared to $1.96 this year.
"Based on our current 2015 guidance, we expect to achieve a 50 percent improvement in earnings compared to 2013 and are firmly on a path toward delivering double-digit returns on invested capital," Donald said.
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