Last updated: 12:35 PM ET, Fri March 27 2015

Carnival Corp. Maintaining Measured Growth

Cruise Line & Cruise Ship | Carnival Cruise Line | Theresa Norton | March 27, 2015

Carnival Corp. Maintaining Measured Growth

PHOTO: Carnival Corp., which based four ships in Shanghai this year, is planning to build purpose-built vessels for the Chinese market. (Courtesy of Thinkstock)

At first glance, Carnival Corp.’s latest ship order sounds huge, but CEO Arnold Donald says the delivery of nine ships in a four-year period is in line with the company’s goal of “measured capacity growth.”

“It’s still just two to three ships a year, which is not dramatically different from what we’ve done,” Donald said in a conference call with financial analysts.

Carnival Corp. proceeded with the order for deliveries from 2019 to 2022 “to get out in front from a planning standpoint," he said.

“Times just require more forward planning,” Donald explained. “It’s to our advantage to communicate with the yards and have a longer-term plan, because they have to work with a lot of subcontractors. It gives them the opportunity to plan further out and to be more effective in lining up those subcontractors. We also included in the nine-ship order a new ship design and that requires additional forward planning.”

New vessels will go to China as well as more established cruise markets in North America and Europe.

“Some of those ships will be purpose-built for China,” Donald said. “China is definitely a market that will be receiving some of those new ships.”

The company hasn’t said yet which of its nine brands will get the new ships. This year, Carnival Corp. is basing four ships in Shanghai — three from Costa Cruises and one from Princess Cruises. The company also has signed memorandums of understanding with the China State Shipbuilding Corp., Fincantieri and China Merchants Group to explore expanding the Chinese market.

“China presents the next great frontier for cruising, and we are making great progress on this front,” Donald said. “China expects to surpass 1 million cruise passengers in 2015, and nearly 50 percent of those will travel on a Carnival Corporation ship. It’s just a matter of time before China becomes the largest cruise market in the world.”

Indeed, in announcing significantly higher first-quarter earnings, Carnival Corp. said Costa’s Asia operations have achieved double-digit revenue yield growth, “affirming the pent-up demand in the region and building confidence in the long-term potential for growth.”


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