Carnival Corporation

2016 Annual Report

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Dear Shareholders,

2016 was another very strong year for our company. We delivered the most profitable year in our history, achieving record net income of $2.8 billion. The continued execution of our core strategy to drive consumer demand in excess of measured capacity growth, contain costs and leverage our industry-leading scale resulted in our third consecutive year of significantly higher earnings and return on invested capital.

We achieved full year 2016 adjusted earnings of $2.6 billion – $500 million higher than last year and more than double 2013 earnings. More importantly, we achieved return on invested capital of 9 percent and doubled our 2013 return on invested capital of 4.5 percent. Record cash from operations topped $5 billion and we returned more than half to shareholders through a 17 percent increase in the annual dividend, totaling $1 billion, as well as supporting the investment of over $2 billion in the repurchase of our stock. At the same time, our sustained earnings improvement, along with our strong balance sheet, resulted in an upgrade of our already solid investment grade credit rating.

These strong results are a credit to the commitment and the passion of our 120,000 shipboard and shoreside team members which, when coupled with the support of our valued travel agent partners, are the foundation of our sustained earnings improvement. It is through their collective efforts that we were able to overcome the significant obstacles that unfolded as the year progressed – including the unusual occurrence of a simultaneous negative impact from fuel and currency as well as a series of global geopolitical and macroeconomic challenges – to exceed the high end of our full-year earnings guidance.

This was among the most remarkable years in the history of the company, not only because of our recordbreaking financial results, but also because of a significant number of milestones achieved that will contribute meaningfully to our future success.

Creating Demand in Excess of Measured Capacity

We introduced three new flagship vessels in 2016: Carnival Vista for Carnival Cruise Line, Holland America Line’s Koningsdam and AIDAprima for our Germany-based AIDA Cruises. Carnival Vista was designed specifically for our fun loving Carnival Cruise Line guests with an onboard brewery experience, entertaining IMAXTM Theatre and exhilarating SkyRide aerial attraction. We celebrated her U.S. arrival with an onboard concert for Operation Homefront military families by country music superstar Carrie Underwood as well as Miss USA, Deshauna Barber, herself a military officer, who served as the ship’s godmother. Holland America Line’s Koningsdam, christened in Rotterdam by her Majesty Queen Maxima of the Netherlands, delivers a new premium experience where our guests can blend their own wine or dance the night away in our carefully engineered Music Walk showcasing Lincoln Center Stage, Billboard Onboard and B.B. King’s Blues Club. And last but not least, AIDAprima made its debut with a spectacular light show, fireworks and memorable naming ceremony witnessed by over 1 million people gathered in Hamburg, Germany. AIDAprima resonates with AIDA’s German guests by combining leading-edge environmental attributes with exceptional guest experiences including racing water slides, a lazy river, climbing walls, an expansive German spa and an ice rink for skating, hockey, curling and even a traditional Christmas market. These well-publicized introductions are certain to continue to stimulate increased consideration for cruising within our portfolio of the World’s Leading Cruise Lines.

Newbuilds are not the only way to stimulate demand. We continue to invest in our existing fleet to further enhance guest experiences, including the recent remastering of Cunard’s Queen Mary 2 and the continued roll out of Fun Ship 2.0 across the Carnival Cruise Line fleet. We also made tremendous progress at our innovation center on our latest guest experience innovation, the Ocean platform – featuring the Ocean MedallionTM – leading to our first major accomplishment in 2017. On January 5th, we were privileged to be the first travel company to be invited to Las Vegas to deliver the opening keynote address at the Consumer Electronics Show, the world’s largest trade show. There we unveiled our leading-edge guest experience technology enabling our people to offer a true breakthrough in unobtrusive, high-touch, personalized travel experience, at scale. The Ocean platform is expected to be rolled out on our Princess Cruises ships beginning later this year.

In addition, to drive cruise consideration, we recently launched three original TV programs that are airing on major U.S. networks – ABC, NBC and the CW – during the popular family-oriented programming blocks. Each program showcases one of our brands providing an amazing vacation while highlighting ocean travel as a means to experience global destinations and learn about other cultures. These programs, which are currently number one or two in their time slots, collectively provide an hour and a half of content per week with over 150 scheduled airings and an annual expected viewership well in excess of 150 million viewers. This successful programming comes on the heels of many impactful shows including a reality-based television series in the UK called “The Cruise” that was filmed onboard Regal Princess, and P&O Cruises’ “Battlechefs,” filmed onboard Britannia. In Italy, “Bravo Chef” was taped onboard our Costa ships and a major motion picture, “Holidays in the Caribbean,” was filmed on Costa Fortuna. In North America, Carnival Cruise Line was featured on “Wheel of Fortune” and “The Ellen DeGeneres Show.” We have many more opportunities in the pipeline to keep cruising at the forefront of vacationers’ minds including “The New Celebrity Apprentice” airing on NBC in February.

Moreover, we launched our travel-deep experience brand Fathom in April 2016 with the inaugural impact sailing to the Dominican Republic to give travelers meaningful opportunities to come alongside locals as they tackle community needs. In this short time, our Fathom guests have already made a meaningful impact in the Dominican Republic, including planting more than 30,000 seeds and trees to support reforestation efforts, providing nearly 25,000 hours of English language lessons to help both children and adults learn conversational English and producing nearly 1,000 water filters to provide families with clean drinking water and thus reduce illness. Building on a legacy of pioneering achievements, Carnival Corporation, through Fathom, became the first cruise company in more than four decades to begin operating voyages from the U.S. to Cuba, an effort that included a change to a long-standing practice that no Cuban-born individual could come or go to Cuba by sea. This moment led to worldwide media coverage and over 55 billion positive media impressions. In fact, destinations are often a powerful tool for demand creation. In 2016, we also celebrated the opening of Holland America’s Denali Square complex in Alaska and full operation of our newest Caribbean destination Amber Cove.

All of these efforts promote consideration around the globe by prominently featuring amazing cruise experiences on our world-leading cruise lines. Our ongoing guest experience efforts coupled with effective public relations help position us for sustained revenue growth by increasing demand in excess of our measured capacity growth. There are large addressable regions with low penetration all over the world, including North America. This includes new opportunities in Asia, where economic growth has raised discretionary income levels, fueling increased demand for vacations. During 2016, we continued progress with our partners China State Shipbuilding Corporation (CSSC) and China Investment Corporation (CIC) to develop the cruise industry in China. We expect our global net capacity growth through 2020 to be 3 percent to 4 percent compounded annually, consisting of double-digit growth in Asia and 3 percent or less growth in our established regions in North America, Europe and Australia. And during that time, an increasing portion of our newbuild capacity is expected to replace less efficient ships.

Leveraging Our Industry-Leading Scale

During the year we continued to make meaningful progress on our cross-brand efforts to leverage our industryleading scale. We launched our new state-of-the-art revenue management system, positioning us well to drive incremental revenue yield as we enhance our demand forecasting. The roll-out of the system across six of our brands is expected to be completed in early 2018. We have already benefited from sharing best practices across our brands and we expect this new yield management tool to begin to foster additional revenue yield uplift in 2017 and beyond.

We accelerated progress on our cost containment efforts, delivering $95 million of savings in 2016, bringing the cumulative savings to date to over $190 million. Work continues in our procurement areas on this multi-year opportunity to further leverage our scale. We recently executed a breakthrough long-term maintenance agreement with Wartsila, our largest engine supplier, creating a partnership that will deliver significant annual savings and further improve energy efficiency across our fleet.

Sustainability Commitment

We are making meaningful progress on our 2020 sustainability goals focusing on our environmental, safety, labor and community impact performance. Having already reduced our unit fuel consumption by 28 percent since initiating the effort, we remain committed to ongoing reduction in air emissions and just this year AIDAprima became the first cruise ship in the world to be powered by environmentally friendly liquefied natural gas (LNG). During the year, Carnival Corporation also signed an agreement with Meyer Werft for three new 180,000-ton cruise ships bringing the total to eight ships on order that will be powered by LNG.

We are committed to continuous improvement in health, environment, safety and security, which are not only critical to our core operations but also to our future success. This year we opened our significantly expanded CSMART Academy at the newly named Arison Maritime Center in the Netherlands where we deliver state-of-the-art maritime training for our bridge and technical teams through cutting-edge bridge and engine room simulators and curricula. And we introduced industry-leading shoreside technology to monitor real-time navigational performance and energy use across our fleet.

As we continue to build a diverse and inclusive workforce, we are honored to be recognized for the third consecutive year among the top companies as a best place to work for LGBTQ equality, by the Human Rights Campaign. We were also recognized by Black Enterprise Magazine as one of the 50 best companies for diversity.

Executing Along the Path to Double-Digit ROIC

While we briefly celebrate 2016 – indeed a very good year for our corporation and our shareholders – we have much more to do to realize the sustained double-digit return on invested capital that our company is inherently capable of delivering.

All of our 2016 accomplishments are building blocks, which leave us well-positioned to reach our goal of double-digit return on invested capital within two years.

Thank you for your continued confidence and your shared vision of building upon the great legacy that is Carnival Corporation & plc as we continue to exceed guest expectations while delivering lifelong memories through the world’s greatest holiday experiences.

CEO Arnold Donald's signature

Arnold W. Donald

President and Chief Executive Officer


  • $0
  • $5 billion
  • $10 billion
  • $15 billion
  • $20 billion
  • 2016 - 16.389 billion
  • 2015 - 15.714 billion
  • 2014 - 15.884 billion
  • 2013 - 15.456 billion
  • 2012 - 15.382 billion
  • $1 billion
  • $1.5 billion
  • $2 billion
  • $2.5 billion
  • $3 billion
Net Income
  • 2016 - 2.779 billion
  • 2015 - 1.757 billion
  • 2014 -
      1.216 billion
  • 2013 - 1.055 billion
  • 2012 -
      1.285 billion
  • $1 billion
  • $1.5 billion
  • $2 billion
  • $2.5 billion
  • $3 billion
Adjusted Net Income
  • 2016 - 2.58 billion
  • 2015 - 2.106 billion
  • 2014 -
      1.504 billion
  • 2013 - 1.209 billion
  • 2012 -
      1.501 billion
  • $0
  • $1
  • $2
  • $3
  • $4
Earnings Per Share - Diluted
  • 2016 - 3.72
  • 2015 - 2.26
  • 2014 - 1.56
  • 2013 - 1.36
  • 2012 - 1.65
  • $0
  • $1
  • $2
  • $3
  • $4
Adjusted Earnings Per Share - Diluted
  • 2016 - 3.45
  • 2015 - 2.70
  • 2014 - 1.93
  • 2013 - 1.55
  • 2012 - 1.92

Passengers Carried = 100,000

Ships in Our Fleet

Stock Performance

The following graph compares the Price Performance of $100 invested in Carnival plc ADSs, each representing one ordinary share of Carnival plc, with the Price Performance of $100 invested in each of the indexes noted below. The Price Performance is calculated in the same manner as previously discussed.

2011 2012 2013 2014 2015 2016 Year $250 $200 $150 $100 Price