Why cutbacks with such high profits

[cruisun]

i am watching a rerun on CNN about the Concordia disaster. During the hearings regarding the disaster it was revealed that Carnival Corp made 11.3 Billion in profit in 2010, paying approximately 1% in taxes in th US.

 

So it just occurred to me.....we always discuss cutbacks on these boards citing the declining economy but Carnival and apparently many of the cruise lines are doing extremely well SO why keep cutting? Cuts in food budgets, staffing, mariner perks, etc etc etc???

[FRANKIEDNYC]

;) Keep increasing that bottom line for the stockholders.

[CruiserBruce]

Whoa.... back the misinformation train up...

 

According to this article:

 

http://www.theglobeandmail.com/globe-investor/carnival-quarterly-profit-takes-a-nosedive/article4363882/

 

Carnival made 14 million in profit in the second quarter of 2012, down from 200 million in 2011, or approximately 800 million (extrapolated) in profit for 2011. That is light years away from 11 billion in profit.

 

Any chance that 11 billion would be revenue, not profit?

 

If it was revenue, 800 million profit would be around 7 or 8% profit, far below other businesses.

 

As to tax rates, as Carnival has a multi-national structure, while it paid (allegedly, based on your sources) 1%, it may have paid much more in taxes elsewhere. I know Carnival has a considerable legal presence in Great Britain, so perhaps it is paying taxes there. Generally, taxes paid in a foriegn country are deductable in the US.

 

 

Edit---- looking at this story,

 

http://www.nytimes.com/2012/06/23/business/carnival-cruise-lines-profit-falls-93-percent.html?_r=0

 

the 11 billion was clearly revenue, NOT profit.

[cruisun]

they clearly stated and displayed in bold letters the profits for all the major cruise lines.

 

I did not do the research and can not back up the information I saw but it seems clear profits are very high even if lower than previous years and that being the case I think the cutbacks are extreme and unjustified:rolleyes:

[CruiserBruce]

Huh? Did you not read the material I presented? 7 or 8% profit is not high. It is low medium range.

 

Remember Carnival has about 110 ships afloat. Making $ 8 million in profit per year on a ship that cost several hundred million to build, and a couple of million a week to operate, it not much.

 

Making $14 million profit on 110 ships in 3 months is barely a profit.... a few dollars a day, per ship. That is why there has been cutbacks.

 

Don't get sucked in by a few headlines on CNN. Facts beat headlines everyday. And I am a CNN follower...

 

By the way, last time I looked, Carnival is in the business to make a profit, and that isn't against the law.

[TraelorMex]

Money, it's always money. Lesson was learned many years ago working in an engineering group for a majour American car company; won't say their name, but their motto, at the time, was 'Quality, is job 1'

One of our engineers developed an exciting an innovative item for the company which would INCREASE productivity, save gasoline (hundreds of gallons per vehicle per year) and, best of all, increase QUALITY by a huge factor. Car manufacturers response? Negative. It would INCREASE each vehicles cost by a whopping 14 cents per unit!!!! Money, always about money....Having said that, I just gottta add:

 

"As one of South Florida's largest employers, Carnival Cruise Lines believes that being a responsible member of a community means giving something back...

 

Carnival's charitable activities are coordinated through the Carnival Foundation...

 

Although Carnival's contributions are wide-ranging, the company primarily focuses on organizations based in South Florida...

 

During times of crisis, Carnival works closely with national and international relief organizations, coordinating corporate and employee donations for emergencies such as hurricanes in the U.S. and Caribbean, and the Haiti earthquake.

 

Shipboard personnel also do their part by participating in beach clean ups and donating their time and talent to orphanages and children's charities throughout the Caribbean and other regions. In the past five years alone, Carnival Cruise Lines and its employees have contributed more than $30 million in financial contributions and in-kind donations to a variety of local and national charities. " (emphasis mine)

 

So, on 7-8% profit, this company gave 30 million bux in contributions in the past 5 years.

 

 

Just another reason to love HAL :)

[Linda&Vern]

From Carnival Corporation Website - Fact Sheet

 

Ships - 100 and Employees - approx 91,000

2011 REVENUES:

$15.8 billion

 

 

2011 NET INCOME:

$1.9 billion

[cruising cockroach]

Remember Carnival has about 110 ships afloat. Making $ 8 million in profit per year on a ship that cost several hundred million to build, and a couple of million a week to operate, it not much.

.

 

Capital cost recovery is accounted for in depreciation expense. Doesn't account for time value of money, I grant you, but not, I wager dissimilar to other capital-intensive industries. And that bottom line could be influenced by leverage too.

[KirkNC]

$1.9 billion sounds like a lot but not when you consider the amount of capital invested on 100 ships.

[AZNative2000]

From Carnival Corporation Website - Fact Sheet

 

Ships - 100 and Employees - approx 91,000

2011 REVENUES:

$15.8 billion

 

 

2011 NET INCOME:

$1.9 billion

 

$1.9 billion sounds like a lot but not when you consider the amount of capital invested on 100 ships.

Also, keep in mind that CCL pays a $1 dividend annually for each of their 779 MILLION shares of stock. ("Shares outstanding is taken from the most recently filed quarterly or annual report." ... from Yahoo Finance website.)

 

Some of those dividends go to some posters on this website.:)

 

Cheers!

[iancal]

Carnival Corp is not a US company. Most cruise lines and their holding companies register elsewhere in order to avoid US taxes and especially US

Workplace safety and employment laws. Not to mention it makes passenger and customer litigation extremely difficult.

 

Great deal for shareholders though.

[patrick65]

Linda and Vern, Thank you for taking the time to check out the facts.

 

It is so easy to check out what we hear. We all should take advantage of this blessing.

[CruiserBruce]

Linda and Vern, Thank you for taking the time to check out the facts.

 

It is so easy to check out what we hear. We all should take advantage of this blessing.

 

Yes, a little research reveals a lot of info. For example, in this article:

 

http://www.cruisemarketwatch.com/articles/cruise-market-watch-announces-2011-cruise-line-market-share-and-revenue-projections/

 

It states the "revenue per pax" (I believe the correct word should be profit) across all cruise lines (not just Carnival) is a little over $200 per person. That is all cruises, all lengths, etc. So, again, $200 pp isn't a lot of profit. And adding a perk that costs, say $10pp, cuts profit by 5%.

[KirkNC]

Also, keep in mind that CCL pays a $1 dividend annually for each of their 779 MILLION shares of stock. ("Shares outstanding is taken from the most recently filed quarterly or annual report." ... from Yahoo Finance website.)

 

Some of those dividends go to some posters on this website.:)

 

Cheers!

 

Like me :p

[Hawaiidan]

1.9 billion, is about 8% net profit.:eek: Thats pretty low. From that you have to put so much in reserves for repairs and the like.

Picture you pay check reduced 92%..

[serendipity1499]

Also, keep in mind that CCL pays a $1 dividend annually for each of their 779 MILLION shares of stock. ("Shares outstanding is taken from the most recently filed quarterly or annual report." ... from Yahoo Finance website.)

 

Some of those dividends go to some posters on this website.:)

 

Cheers!

 

Like me :p

 

And me...:) Agree an 8% profit is not that great!

Betty

[MaggieMM]

i am watching a rerun on CNN about the Concordia disaster. During the hearings regarding the disaster it was revealed that Carnival Corp made 11.3 Billion in profit in 2010, paying approximately 1% in taxes in th US.

 

So it just occurred to me.....we always discuss cutbacks on these boards citing the declining economy but Carnival and apparently many of the cruise lines are doing extremely well SO why keep cutting? Cuts in food budgets, staffing, mariner perks, etc etc etc???

 

I have been lurking but like you said the complaints on these boards seem to reflect cuts all across the Carnival brands.

 

Just to play Devil's Advocate, maybe the cuts are anticipation to the economy and projected decreases in booking? This is a business. It costs about the same in fuel if the ship is only 80% full as it does if it is at capacity.

[CruiserBruce]

I have been lurking but like you said the complaints on these boards seem to reflect cuts all across the Carnival brands.

 

Just to play Devil's Advocate, maybe the cuts are anticipation to the economy and projected decreases in booking? This is a business. It costs about the same in fuel if the ship is only 80% full as it does if it is at capacity.

 

The job of business is always to be projecting forward. In the cruise business, it is a constant battle to determine fuel and food prices, and adjust fares to maintain profits, sales and full ships. That is how businesses have to think.

[Taxguy77]

The job of business is always to be projecting forward. In the cruise business, it is a constant battle to determine fuel and food prices, and adjust fares to maintain profits, sales and full ships. That is how businesses have to think.

 

Very true! But they have over-cheapened the experience in the opinion of DW and me. We choose to drive to some land venues we have been skipping to cruise.

Not to say we didn't enjoy all our cruises, but the last two (different lines) were not as great as our last two drives.

NEW cruizers: You must have a cruise or two, make one the Medeteranian!

[dakrewser]

Very true! But they have over-cheapened the experience in the opinion of DW and me. We choose to drive to some land venues we have been skipping to cruise.

Not to say we didn't enjoy all our cruises, but the last two (different lines) were not as great as our last two drives.

NEW cruizers: You must have a cruise or two, make one the Medeteranian!

 

Hard to drive to Rome, though, isn't it? ;)

[Hawaiidan]

I tried to drive to Hawaii, it didn't go all that well

[BruceMuzz]

It's quite a leap to assume that since Carnival Corporation is making a profit, HAL must also be making a profit.

General Motors made plenty money for years, while it's Cadillac Brand was bleeding money.

 

Inside the cruise industry, we all know that Carnival Cruise Line has been the most profitable cruise line company in the world for many years.

We also know that HAL and Princess have been the poorest performers for many years.

 

Also inside the cruise industry, it is common knowledge that any ship carrying fewer than 2,000 passengers cannot make a profit. HAL has 9 (out of 15) ships carrying fewer than 2,000 pax each.

I would be surprised if HAL is making any profit at all.

[peaches from georgia]

....

Also inside the cruise industry, it is common knowledge that any ship carrying fewer than 2,000 passengers cannot make a profit. HAL has 9 (out of 15) ships carrying fewer than 2,000 pax each.

......

Bruce, does the 2000 pax theory go for just mass market lines? Surely not all the luxury cruiselines with 250-1000 pax on their ships are unprofitable.

[Hawaiidan]

take a 3000 pasenger ship where they are paying 75 a day or less pp ( 225K)

 

Then take a ship with 1000 where the average is $350pp is (350K) in a ship 1/3 the size that cost about 30% less to operate as the 3000; your making 125K more and with an increased margin of 30% less overhead which is akin to making 163K more for a smaller ship with premimum branding.:cool:

[KirkNC]

I tried to drive to Hawaii, it didn't go all that well

 

Try driving that with a Fiat, the new commercials make it possible. :p