ii view: Carnival restarts dividend after breaking records

Fourth-quarter results to 30 November

• Revenue up 6.6% to $6.33 billion (£4.7 billion)
• Operating income up 31% to $735 million (£544 million)
• Adjusted earnings up 35% to $0.31 per share
• Quarterly dividend of $0.15 per share

Guidance:

• Expects adjusted full-year 2026 profits to rise by 12% on less than 1% capacity growth

Chief executive Josh Weinstein said:

“2025 was a truly phenomenal year. We set new records across our business, achieved investment grade leverage metrics and, as announced just today, reinstated our dividend.

“With our strengthened balance sheet, powerful and diverse portfolio of world-class cruise lines and exclusive destinations, we are well positioned to capitalize on a tremendous runway to continue driving yield improvement and exceptional returns.”

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ii round-up:

Carnival (LSE:CCL) reported new financial records, with a more than $10 billion reduction in net debt since the pandemic enabling the cruise ship operator to restart dividend payments.

Record fourth-quarter revenues of $6.33 billion (£4.7 billion), up 6.6% from a year ago, helped drive adjusted earnings 35% higher to $0.31 per share. Record booking volumes over the last three months for 2026 and 2027 sailings now see the Miami headquartered company predicting 12% growth in 2026 profits, with adjusted earnings of $2.48 per share. Analysts had been forecasting an outcome of $2.44 per share. There'll be a quarterly dividend payment of $0.15 per share.

Shares in the FTSE 250 and S&P 500 company rose by close to 10% in US trading to touch a five-year high, leaving them up by around a quarter so far in 2025. The FTSE 250 and S&P 500 indexes are up by 7.7% and 16% respectively year-to-date. Much smaller rival Saga (LSE:SAGA) has more than doubled. 

As well as Carnival itself, the firm's other brands include Princess Cruises, Cunard and P&O, with the company unique given its inclusion in both the FTSE250 and S&P 500 indexes.

Under a new simplification proposal, the group is now considering unifying its dual-listed structure into a single company, Carnival Corporation, listed solely on the New York Stock Exchange. Further details will be given in February, with a shareholder vote expected in April. 

A ratio of adjusted profits (EBITDA) to net debt of 3.4 times is down from 4.3 times a year ago, with credit rating agency Fitch having previously upgraded its view to ‘investment rating.’

The newly declared dividend of $0.15 per share is payable to eligible shareholders on 27 February.  

First-quarter results are likely to be announced mid-to-late March. 

ii view:

Started with just one second-hand ship in 1972, Carnival today operates around 90 ships across various brands and including Aida, Holland America Line, and Seabourn. Passenger numbers hit 13.6 million during the 2025 financial year, up from 13.5 million in 2024. Geographically, customers from the USA totalled the most during 2024 at 56%. That was followed by Germany at 11%, the UK 8%, Australia and New Zealand 8% and the rest of the world the balance of 17%.  

For investors, the many factors outside of management’s control which can hinder performance, such as wars, the weather, and even pandemics, should not be forgotten. The global economic outlook remains uncertain, with rising US unemployment potentially crimping customer demand. Fuel costs and currency movements have previously hit profits, while S&P has kept its credit rating below an investment rating, if if only just.  

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On the upside, future customer bookings remain robust, aided by investment in new destinations such as its Caribbean Celebration Key outlet. Fuel costs fell 8% during this latest quarter compared to a year ago. The potential new simplified company structure is expected to reduce group costs, while management’s focus on reducing net debt is ongoing. 

In all, and while travel related companies generally warrant an added degree of caution, trends such as ageing populations and the desire for multi destination holidays are likely to see investors stay supportive given long-term potential. 

Positives: 

• Diversity of brands and geographical locations
• Investment in own destinations

Negatives:

• Uncertain economic outlook
• Exposure to currency movements

The average rating of stock market analysts:

Buy