Carnival Cruises SWOT

Company Profile
Carnival Corporation & PLC is one of the largest global cruise and vacation companies in the world. Carnival primarily
operates in North America, UK, Germany, New Zealand, Spain, Brazil and Australia. It is headquartered in Miami, Florida,
with another headquarters in London, UK. As of January 2010, the company operated 93 cruise ships. Carnival Cruise Lines
was set up as a subsidiary of the American International Travel Service by Ted Arison in 1972.
They made a number of acquisitions from 1989-2009 increasing the brand portfolio of the company; including Carnival
Cruise Lines, Princess Cruises, Holland America Line, ibero Cruises, Costa Cruises, P&O Cruises, AIDA Cruises, Cunard Line,
P&O Cruises Australia, Ocean Village and The Yachts of Seabourn.

Strengths

Carnival is one of the world's largest cruise operators, has a large fleet capacity and operates 11 of the most
recognizable cruise brand names. Their portfolio of brand names appeals to almost every niche market, from budget
minded, contemporary to luxury cruises.

They are such a large company that they have significant cost advantages over most of their competitors.
Carnival is one of the profitable cruising companies. The company's average net income (FY2005 to FY2009)
amounted to 18.1% compared to the industry standard of 6.3%.

Carnival aggressively and effectively invests in print and television media. Their promotions target the lifestyles of
each group of customers. Carnival are "Fun Ships" Holland America, a premium cruise, is promoted through the tagline "a
signature of excellence" Seabourn, projects itself as "intimate luxury" while the Ocean Village projects as "the cruise for
people who don't do cruises".

Carnival has a 47% market share in the UK, 68% in Italy, 51% in Germany and 45% in France.

Weaknesses

The net profit was $1,790 million in FY2009, a decrease of 23.2% as compared to 2008.
Carnival derives a majority of its revenue (nearly 52%) from US customers. In 2009 the revenue from the North
American market registered a double digit decline. The over-dependence on the US market makes Carnival vulnerable to
the economic fluctuations of the American economy and this company is dependent on customers disposable income.

Another weakness is that Carnival reports their financial statements in dollars. About half of their revenue is
generated in a non-US currency, but is reported in terms of US dollars. The value of the dollar against Euro appreciated
from 1.60 in January 2010 to 1.53 by April 2010 against the Pound. If the dollar strengthens it would record a lower
revenue than is actually earned.

In the middle of economic uncertainty Carnival has 13 ships under construction as of November 2009, and the
estimated cost of all this growth is around $8.2 billion. It is difficult at best to justify such a huge cash outflow in the
middle of economic instability. This may result in consequences like huge debt burden on the balance sheet and reduced
profitability.

Opportunities

The cruise industry has grown considerably in the past 10 years but still occupies a very small proportion of the
global vacation market. Cruise lines accounted for only 4.5% of the $542.2 billion worth of the travel industry in 2009.
While the revenue for cruises has declined in the US, it is growing in Europe and Asia, leading to more opportunities for
Carnival to expand in these regions.

They are planning to increase berth capacity for the European market 37% by 2012.
Customers in Asia are now looking for luxurious cruises as a vacation option. Disposable income of the Chinese
consumer has grown annually by 10% a year. The total number of passengers sourced from China increased approximately

74% in 2009 so the Costa Classica was launched specifically for this market. They are also planning to introduce the larger
cruise liner Costa Romantica in 2010.

Trends have shifted in the cruising industry towards the 45-60 year old age group. As this age group grows in
population, Carnival can take advantage of the economies of scale and offer them the best prices.

In July 2009, Carnival announced the union of Costa Europa with Thomson Cruises, a British Travel Company,
under a 10-year bareboat charter beginning in April 2010.

Threats

Carnival has been taking advantage of special tax loopholes to avoid paying US corporation taxes. In 2009 the US
government decided to look at closing those loopholes. If these loopholes are closed, it could affect their financial
statements and fiscal bottom line in the future.

The U.S. Environmental Protection Agency has changed laws to reduce the sulfur content (emission) in fuel oil
used aboard ships. This increases the demand for lower sulfur fuel, which raises the prices of the fuel. Carnival may have
to deal with a significant increase in fuel prices.

In 2009, Carnival experienced bad press when three passengers fell off ships in a three week period. There were
a total of 22 incidents of passengers falling overboard in 2009. As of December 2009, Carnival was not required to report
such incidents. Such events reflect negatively on the company and the industry.

In December 2008, passengers on the Carnival owned Oceania cruise ship were attacked by Somali pirates. The
ship sped away and no one was injured, but the threat of terrorism and pirates overtaking cruise ships is a concern for
companies in this industry, and also negatively affect consumers perceptions of cruising.