Carnival Cruise Lines 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

We’ve turned a corner

“This is an exciting time for our corporation. Last quarter we indicated that we felt like we were turning the corner and our third quarter confirmed that we have. The 15% earnings improvement achieved in the third quarter and the increased guidance expected an even stronger improvement in full year earnings is truly a credit to our global team.’

Technology initiatives to reduce fuel consumption

“we have a series of technology initiatives in progress related to energy efficiency in areas like propulsion, lighting and air conditioning to name a few that we will continue to roll out during the resulting accelerated dry dock schedule. These initiatives have a quick payback period as we continue to steadily reduce few consumption in the years to come.

It is gratifying to say we have reduced our fuel consumption by another 5% this year and 25% since 2007, meeting our stated goal of delivering a 20% reduction in carbon emissions ahead of schedule while saving more than 1 billion gallons of fuel and $2.5 billion of fuel cost during that period.”

The Chinese government is promoting the cruise industry

“The Costa brand, as I mentioned, in the introduction here was the first brand to do so in China. And things take time to develop and we have been successful in developing our business there and others have come in now as well. What’s changed in addition to that, first was it just takes time to develop a market. But what’s changing in addition to that is that the government has it as a priority now.

The Chinese government has a plan for development of a cruise industry in China and that means, you are getting tremendous support and opportunity to participate led by the various governments whether it’s the Central Government or the provincial or the municipal governments like in Shanghai and Tianjin. And so all of that bodes well, we are beginning to gain momentum. Distribution system is learning how to market a product such as a cruise product. You are beginning to see players in China look at building the domestic brand, which we think will be real powerful at to developing that market.’

The brand has recovered very quickly, but of course we’d like it to recover faster

“Well, real quickly, in terms of the overall feeling about the brand. I would say that the recovery is probably the little faster than we had a right to believe it would be, but at the same time, it’s not nearly fast enough for all of us’

Optimistic about both North America and Europe going into 2015

“I would just say that we have seen the lengthening in the booking curve and higher prices in the first half of the year so far in North America. And while we’ve seen somewhat latent of the booking curve for the first half of next year in Europe, the prices are comparable pricing, so that’s probably what you are reacting to.

Having said that, I wouldn’t describe that broadly as North America being stronger than Europe or vice versa. Some of it has to do with the comparisons year-to-year and just a mix. So we’ll see how it goes. We are optimistic about both markets going into 2015.”

Continue to pursue fuel savings

“But, obviously, we will continue to aggressively pursue not only through the Department of Technologies but also managing deployments and managing the ships on itineraries from a fuel consumption standpoint, as well as all the practices onboard.

And so we will continue pursue fuel savings as we have in the past.”

We’re expecting quite a bit of growth in Asia and China

“Just one additional comment on the — on Arnold was answering, keep in mind that we’re expecting quite a bit of growth in the emerging markets particularly, Asia and China. So that should be able to profitably absorb a lot of that capacity and the other more established markets will see it more measured capacity increase.”