Analysis of Debt
Total Debt (Carrying Amount)
Carnival Corp. & plc, balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
The total debt carrying amount exhibits a period of significant escalation between 2019 and 2022, followed by a moderate contraction in 2023. The overall liability profile transitioned from a baseline of $10,323 million in 2018 to a peak of $34,546 million in 2022, before declining to $30,572 million by the end of 2023.
- Long-Term Debt Trends
- The primary driver of the increase in total liabilities was long-term debt excluding the current portion. This figure grew from $7,897 million in 2018 to $31,953 million in 2022, representing a substantial increase in long-term leverage. A reduction to $28,483 million in 2023 indicates a trend toward debt reduction or the repayment of principal.
- Short-Term Borrowing Volatility
- Short-term borrowings displayed significant volatility, with a sharp increase starting in 2020, reaching $3,084 million, and remaining elevated at $2,790 million in 2021. A rapid decline followed, with borrowings falling to $200 million in 2022, suggesting a shift away from short-term credit facilities.
- Current Maturity Obligations
- The current portion of long-term debt showed a consistent upward trajectory from 2018 ($1,578 million) through 2022 ($2,393 million), signaling an increase in the volume of debt coming due within the one-year window. This figure decreased to $2,089 million in 2023, aligning with the overall reduction in total debt carrying amount.
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Total Debt (Fair Value)
| Nov 30, 2023 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Total debt (fair value) | 29,728) |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | 0.97 |
Based on: 10-K (reporting date: 2023-11-30).
Weighted-average Interest Rate on Debt
Weighted-average interest rate on debt: 5.74%
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| 7.90% | 192) | 15) | |
| 9.90% | 623) | 62) | |
| 4.00% | 2,406) | 96) | |
| 7.00% | 500) | 35) | |
| 10.40% | 2,030) | 211) | |
| 5.80% | 426) | 25) | |
| 7.60% | 1,351) | 103) | |
| 7.60% | 550) | 42) | |
| 5.80% | 3,100) | 180) | |
| 5.80% | 1,131) | 66) | |
| 6.00% | 2,000) | 120) | |
| 10.50% | 1,000) | 105) | |
| 3.40% | 2,756) | 94) | |
| 3.40% | 3,652) | 124) | |
| 6.70% | 200) | 13) | |
| 1.00% | 659) | 7) | |
| Total | 22,576) | 1,297) | |
| 5.74% | |||
Based on: 10-K (reporting date: 2023-11-30).
1 US$ in millions
2 Weighted-average interest rate = 100 × 1,297 ÷ 22,576 = 5.74%
Interest Costs Incurred
Carnival Corp. & plc, interest costs incurred
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
A significant upward trajectory in total interest obligations is observed between November 30, 2018, and November 30, 2023. Total interest costs incurred rose from 230 million US dollars in 2018 to 2,130 million US dollars in 2023, representing an increase of approximately 826% over the five-year period.
- Interest Costs Incurred
- Interest obligations remained relatively stable between 2018 and 2019, with a marginal increase from 230 million to 245 million US dollars. A sharp inflection point occurred in 2020, where costs surged to 961 million US dollars. This growth accelerated in 2021, reaching 1,684 million US dollars. Following a slight contraction in 2022 to 1,657 million US dollars, costs reached a peak of 2,130 million US dollars by the end of 2023.
- Interest Expense, Net of Capitalized Interest
- The net interest expense closely mirrors the trend of total costs, acting as the primary driver of the overall increase. The expense rose from 194 million US dollars in 2018 to 2,066 million US dollars in 2023. The most dramatic escalation occurred between 2019 and 2021, during which the net expense increased from 206 million to 1,601 million US dollars.
- Capitalized Interest
- Capitalized interest exhibits considerably lower volatility and represents a small fraction of the total interest costs. Values fluctuated between a low of 36 million US dollars in 2018 and a high of 83 million US dollars in 2021. Unlike the net interest expense, capitalized interest experienced a notable decline in 2022 to 48 million US dollars before recovering to 64 million US dollars in 2023.
The divergence between the rapid growth of net interest expenses and the relative stability of capitalized interest indicates that the increase in borrowing costs has predominantly impacted the income statement rather than being absorbed into asset valuations. The substantial rise beginning in 2020 suggests a significant expansion of the debt profile or a marked increase in the cost of debt service.
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Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
2023 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense, net of capitalized interest
= 2,004 ÷ 2,066 = 0.97
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= 2,004 ÷ 2,130 = 0.94
The analysis of debt servicing capacity reveals a dramatic fluctuation in coverage ratios from 2018 through 2023, characterized by an initial period of high solvency, a severe downturn, and a gradual return to positive earnings coverage.
- Analysis of the Adjusted Interest Coverage Ratio
- The adjusted interest coverage ratio experienced a sharp contraction, falling from 14.78 in 2018 to a low of -9.74 in 2020. This shift indicates a transition from a strong capacity to service debt to a state where interest obligations far exceeded operating income. A consistent recovery trend followed, with the ratio improving to -4.70 in 2021 and -2.70 in 2022, eventually returning to a positive value of 0.94 by November 30, 2023.
- Comparison with Non-Adjusted Coverage
- The interest coverage ratio without capitalized interest followed an almost identical trajectory, moving from 17.53 in 2018 to -10.46 in 2020, before recovering to 0.97 in 2023. The adjusted ratio remained consistently lower than the non-adjusted ratio during the high-growth period (2018-2019) and slightly less negative during the deficit period (2020-2022), suggesting that capitalized interest marginally buffered the impact of operating losses on the coverage metric.
- Solvency Trajectory
- The trend demonstrates a multi-year cycle of financial distress and rehabilitation. While the return to a positive ratio in 2023 marks a critical inflection point, the current coverage level of 0.94 remains substantially below the historical baseline established prior to 2020, indicating that debt servicing continues to be a significant financial consideration.
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