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CCL Still Close to the Tights, post Numbers

11 January 2021 by jbchevrel

Carnival Corp. (CCL) is a now-famous cruise line operator. Today we have seen some widening of the 5y CDS, by +23bp at 18% (+100bp running) on our European close. The company posted an adjusted Q4 [ended November 30] net loss of -$1.9 billion [non adj -$2.2billion / consensus -$1.57 billion / Q4-19: $423 million]. On a more positive note, CCL also said that demand is surging for 2022, although that sounds a bit far from us. For the time being, cruise operations around the world remain suspended due to the COVID pandemic, and that has been the case since mid March [some CCL sailings had resumed in Europe in fall 2020]. Advanced bookings for H1-2022 are ahead of 2019, despite less marketing. Advanced bookings for H2-2021 are within the historical range. CCL didn’t disclose preliminary revenue figures in its press release, but a spokesman said revenue was in the tens of millions of dollars. The consensus is at $156 million. Ending the year 2020 [as of November 30] with $9.5 billion in cash and cash equivalents, CCL on average burned about $500m/month during Q4, less than the $530m it had expected due to the timing of capital expenditures. CCL expects to burn, on average, about $600m/month for Q1-2021. In cash space, 11.5% 23s are down -0.5pt and the equity was down -2%. The earnings season will kick off at the end of this week with JPM and others reporting this Friday.