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Carnival Net Income dropped on 442% and Revenue dropped on 73.1%

11 Mar 2021 • About Carnival ($CCL) • By InTwits

Carnival reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
  • Carnival is a company in decline: FY2020 revenue growth was -73.1%, 5 years revenue CAGR was -18.7%
  • Carnival has high CAPEX intensity: 5 year average CAPEX/Revenue was 29.2%. At the same time it's a lot of higher than industry average of 22.2%.
  • CAPEX is quite volatile: £0m in FY2020, £1m in FY2019, £0m in FY2018, £0m in FY2017, £0m in FY2016
  • The company has unprofitable business model: ROIC is -20.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.

Revenue and profitability

The company's Revenue dropped on 73.1%. During FY2016-FY2020 Revenue growth topped in FY2019 at 10.3%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin dropped on 142 pp from 26.1% to -116% in FY2020.

Gross Margin dropped on 85.4 pp from 38.0% to -47.4% in FY2020. SG&A as a % of Revenue surged on 21.7 pp from 11.9% to 33.6% in FY2020.

Net Income margin dropped on 197 pp from 14.4% to -183% in FY2020.

Investments (CAPEX, working capital and M&A)

Carnival's CAPEX/Revenue was 64.7% in FY2020. The company showed fast CAPEX/Revenue growth of 47.9 pp from 16.8% in FY2017 to 64.7% in FY2020. For the last three years the average CAPEX/Revenue was 36.9%. During the last 5 years CAPEX as a % of Revenue bottomed in FY2017 at 16.8% and was growing since that time.

Return on investment

The company operates at negative ROIC (-20.7%) and ROE (-44.6%). ROIC dropped on 29.8 pp from 9.1% to -20.7% in FY2020. ROE dropped on 56.6 pp from 12.0% to -44.6% in FY2020.

Leverage (Debt)

Debt level is -0.6x Net Debt / EBITDA and Debt / EBITDA. Net Debt / EBITDA dropped on 2.0x from 2.0x to in FY2020. Debt jumped on 147% while cash surged on 1,736%.

Carnival has no short term refinancing risk: cash is higher than short term debt (191.3%).

Management team

Arnold W Donald is a the company's CEO. Arnold W Donald has spent 7 years with the company. The company's CFO David Bernstein has spent 14 years with the company.

Financial and operational results

FY ended 30 Nov 2020

Carnival ($CCL) key annual financial indicators

mln. $201620172018201920202020/2019
Gross Profit7,0067,0097,7927,916-2,651-133.5%
Net Income2,7792,6063,1522,990-10,236-442.3%
Balance Sheet
Short Term Debt1,0972,2022,4261,8274,973172.2%
Long Term Debt8,3576,9937,8979,67623,408141.9%
Cash flow
Revenue growth4.3%6.8%7.8%10.3%-73.1%
EBITDA growth14.5%-3.2%14.8%1.7%-219.3%

Gross Margin42.7%40.0%41.3%38.0%-47.4%-85.4%
EBITDA Margin29.3%26.6%28.3%26.1%-115.9%-142.0%
SG&A, % of revenue13.4%12.9%13.0%11.9%33.6%21.7%
Net Income Margin17.0%14.9%16.7%14.4%-183.0%-197.3%
CAPEX, % of revenue18.7%16.8%19.9%26.1%64.7%38.6%

Net Debt/EBITDA1.8x1.9x1.7x2.0x

Peers in Travel & Leisure

Below we provide Carnival benchmarking against other companies in Travel & Leisure industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Easyhotel ($EZH)8.7%39.7%33.7%56.0%-
Nektan ($NKTN)995.3%129.1%50.1%13.5%-
Intercontinental Hotels Group ($IHG)117.0%4.2%6.4%6.7%-
Go-Ahead Group ($GOG)-3.6%-0.6%6.1%6.1%
Tui Ag ($TUI)-7.9%-0.4%2.5%-58.0%
Median (9 companies)9.0%6.6%6.4%2.5%-12.8%
Carnival ($CCL)-6.8%7.8%10.3%-73.1%

Top companies by Gross margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Intercontinental Hotels Group ($IHG)86.0%86.0%83.7%82.9%-
Nektan ($NKTN)67.9%64.1%62.2%56.9%-
Easyhotel ($EZH)64.3%61.3%53.5%48.1%-
Rank Group ($RNK)44.7%44.7%45.5%45.6%42.7%
Eclectic Bar Grp ($BAR)80.7%82.3%82.9%35.6%-
Median (6 companies)44.7%40.4%49.5%46.8%8.9%
Carnival ($CCL)42.7%40.0%41.3%38.0%-47.4%

Top companies by EBITDA margin, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Heavitree Brewery ($HVT)25.0%27.8%24.5%27.4%-
Eclectic Bar Grp ($BAR)6.1%11.1%13.0%21.0%-
Intercontinental Hotels Group ($IHG)20.2%19.7%14.9%16.1%-
Easyhotel ($EZH)21.6%18.0%19.4%13.5%-
Rank Group ($RNK)19.4%18.4%13.5%12.1%15.5%
Median (8 companies)15.9%16.7%14.2%12.8%12.6%
Carnival ($CCL)29.3%26.6%28.3%26.1%-115.9%

Top companies by CAPEX/Revenue, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Easyhotel ($EZH)153.2%269.8%412.1%142.5%-
Heavitree Brewery ($HVT)17.8%15.3%10.2%6.7%-
Eclectic Bar Grp ($BAR)5.5%5.4%10.5%5.5%-
Tui Ag ($TUI)4.4%6.0%5.4%5.5%8.5%
Rank Group ($RNK)5.4%4.2%3.7%3.3%5.1%
Median (7 companies)5.5%5.2%4.9%5.5%5.1%
Carnival ($CCL)18.7%16.8%19.9%26.1%64.7%

Top companies by ROIC, %

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Go-Ahead Group ($GOG)33.1%25.4%22.9%12.8%1.8%
Heavitree Brewery ($HVT)8.5%10.3%8.7%9.6%-
Rank Group ($RNK)19.7%17.3%10.2%8.1%3.6%
Eclectic Bar Grp ($BAR)1.2%8.3%8.1%6.4%-
Tui Ag ($TUI)15.5%14.4%12.1%6.2%-35.1%
Median (9 companies)6.3%7.1%8.7%7.2%1.8%
Carnival ($CCL)9.5%8.6%9.8%9.1%-20.7%

Top companies by Net Debt / EBITDA

Top 5 FY2016 FY2017 FY2018 FY2019 FY2020
Heavitree Brewery ($HVT)4.1x3.7x3.7x2.9x-
Easyhotel ($EZH)-5.0x-14.0x-11.4x2.5x-
Tui Ag ($TUI)-0.0x-0.5x0.0x1.1x-
Eclectic Bar Grp ($BAR)6.8x2.1x3.4x0.7x-
Intercontinental Hotels Group ($IHG)1.9x2.3x3.1x0.0x-
Median (7 companies)1.9x1.6x1.1x0.7x2.0x
Carnival ($CCL)1.8x1.9x1.7x2.0x-