Carnival Corporation & plc Q4 FY2025 earnings call

Key Points:

• Josh Weinstein noted 2025 was a strong year with record fourth quarter revenues, yields, operating income, and EBITDA. Full-year net income was over $3 billion, a 60% increase from 2024. Yields improved over 5.5%, and unit costs were better than initial guidance. ROIC exceeded 13%.
• Positive outlook for 2026 with 2/3 of business booked at high prices, strong onboard revenue and customer deposits. Expected 3% yield increase in 2026, unit cost growth of 3.25%, and EBITDA of $7.6 billion. Dividend reinstated at $0.15 per quarter.
• Operational highlights include destination developments like Celebration Key, RelaxAway Half Moon Cay, and Isla Tropicale. Leveraging AI for marketing and personalization, diversified portfolio, and strong brand positioning.

No detailed breakdown of product segments by revenue contribution provided in the transcript; general company performance highlighted strong results across the board.

Guidance:

• 2026 yield expected to increase 3% (normalized), factoring in Carnival Cruise Line's new loyalty program and geopolitical adjustments. Unit cost growth projected at 3.25%.
• Net income guidance for 2026 over $3.45 billion, EBITDA $7.6 billion. Targeting net debt to EBITDA ratio below 3x by year-end.
• Carnival Cruise Line's new loyalty program (Carnival Rewards) starts in September 2026, impacting yields with expected 0.2 point impact in 2026.

Risks:

• Consumer sentiment fluctuations, which didn't significantly impact bookings. Capacity spikes in concentrated markets. Geopolitical conflicts in the Arabian Gulf. Regulatory changes like emission allowances and Pillar 2 income taxes.

Q: Robin Farley asked about guidance and Q1 bookings, specifically if the acceleration in onboard spend and close-in demand is factored into guidance.

A: Josh Weinstein stated it's their best guess based on current momentum, but the world changes daily and they'll continue to aim for exceeding expectations.

Q: Brandt Montour inquired about bookings momentum and Caribbean exposure, asking if there was a strategy to take volume at the expense of pricing growth.

A: Josh Weinstein responded that revenue managers are maximizing revenue by brand and voyage, with a portfolio approach in the Caribbean.

Q: Matthew Boss asked about 2026 momentum, costs, and fuel, specifically about cost management embedded in the 3.25% net cruise cost outlook.

A: David Bernstein replied that about 1.1% of cost mitigation from efficiencies and scale leverage was embedded.

Q: Steven Wieczynski asked about Caribbean yields and cost cadence, inquiring if Caribbean yields would be positive in 2026 and the cost cadence across quarters.

A: Josh Weinstein said Caribbean yields would support momentum, and David Bernstein noted first quarter costs are higher than full year, with back half likely having higher yield increases.

Q: Benjamin Chaiken asked about dry dock allocation and fuel taxes, specifically the split between OpEx and CapEx and fuel tax impacts.

A: David Bernstein explained the small movement in dry dock allocation and that fuel tax increased due to full emission allowance coverage in 2026.

Q: James Hardiman asked about Caribbean dynamics and European strategy, inquiring about global capacity growth and European exposure.

A: Josh Weinstein stated they're happy with sourcing and deployment strategies, sticking to their plan for European and North American brands.

Q: Elizabeth Dove asked about same-ship yield growth and Celebration Key, inquiring about brand improvements and Celebration Key's impact.

A: Josh Weinstein mentioned brand improvements in commercial execution and marketing, with Celebration Key proceeding as planned.

Q: David Katz asked about fixed vs variable costs and corporate listing, inquiring about cost leverage and corporate structure simplification.

A: David Bernstein said costs are mostly fixed but optimized through AI, and the corporate structure unification aims to reduce costs and increase liquidity.

Q: Jaime Katz asked about consumer demand and occupancy management, inquiring about consumer demand by income level and occupancy optimization.

A: Josh Weinstein stated no meaningful difference across consumer segments and that occupancy is managed to maximize revenue.

Q: Conor Cunningham asked about balance sheet targets and pricing vs occupancy, inquiring about balance sheet targets and pricing strategy.

A: David Bernstein said targeting net debt to EBITDA under 3x, and Josh Weinstein noted they maintain price integrity while maximizing revenue.

Q: Sharon Zackfia asked about marketing spend and digital targeting, inquiring about marketing spend as a percent of sales and digital targeting shifts.

A: Josh Weinstein said marketing spend is about 3.5% of revenue, with shifts to digital and AI to keep pace with consumer changes