Carnival Corp. & plc (NYSE:CCL)

The analysis of the annual current and deferred income tax expense reveals notable trends in the taxation profile over the six-year period under review.

Current Income Tax Expense

The current income tax expense exhibited positive values in the initial two years, increasing from $54 million in 2018 to $71 million in 2019. This indicates an increased tax burden during this interval. However, a significant reversal is observed in 2020 and 2021, with current tax expenses turning negative to -$17 million and -$21 million respectively, suggesting the recognition of tax benefits or potential refunds during those years. In the latest two years, 2022 and 2023, the current tax expense returned to a positive figure, though at a lower magnitude compared to the early period, valued at $13 million and $12 million.

Deferred Income Tax Expense

No data was reported for deferred income tax expense throughout the analyzed timeframe, implying that either no deferred tax amounts were recorded or such information was unavailable or not applicable for these years.

Net Income Tax Expense (Benefit)

The net income tax expense, representing the sum of current and deferred taxes, mirrors the pattern of the current income tax expense due to the absence of deferred tax data. It peaked in 2019, followed by a significant negative shift in 2020 and 2021, illustrating a period of net tax benefits. In the subsequent years, the net income tax expense returned to positive territory but at values significantly lower than the initial years.

Overall, the company experienced variability in its tax expenses during the period, with a notable mid-period shift to tax benefits that reversed in the later years. The absence of deferred tax expense disclosures limits insights into the accounting for temporary differences or carryforwards impacting the tax expense.

The analysis of the effective income tax rate over the six-year period reveals a generally low and stable rate from 2018 through 2021, followed by significant fluctuations in the last two years.

2018 to 2021 Trend

During these four years, the effective income tax rate remained positive but relatively minimal, ranging from 0.17% to 2.32%. This indicates a low tax burden on income before 2022.

2022 Change

In 2022, the rate turned negative at -0.21%, which suggests the company may have recorded tax benefits or refunds rather than expenses. This reversal from a positive to a negative effective tax rate represents a material change in tax circumstances.

2023 Variation

In 2023, the effective income tax rate decreased sharply further to -19.35%, indicating a substantial negative tax rate. This extreme negative rate is uncommon and points to significant tax credits, deductions, or one-time adjustments impacting the tax calculation.

Overall, the analysis indicates a stable and low tax impact in the initial years, followed by a marked and unusual shift to negative tax rates in the most recent periods. This substantial reduction in the effective income tax rate could have material implications for net profitability and cash flow related to taxes. Further investigation into underlying causes such as tax planning strategies, changes in tax law, or extraordinary tax events is advisable to fully understand these variations.

The financial data for the period ending November 30 from 2018 to 2023 contains only one item: net deferred tax assets (liabilities). The dataset has no numerical values reported for any of the years under review, indicating either lack of recognition, absence of this item in the financial statements, or omission in the reported data.

Given the absence of data points across all periods, it is not possible to identify any trends, changes, or patterns related to deferred tax assets or liabilities for the years stated. Without recorded figures, no analysis of growth, reduction, or volatility can be conducted for this financial metric.

In summary, the presented information provides no basis for evaluating the company’s deferred tax position or its evolution during the six-year timeframe ending in 2023.

The data reveals a notable decline in both reported and adjusted shareholders’ equity over the six-year period. Initially, shareholders’ equity remained relatively stable with a slight increase from 24,443 million USD in 2018 to a peak of 25,365 million USD in 2019. However, from 2019 onwards, there is a sharp and consistent decrease, reaching a low of 6,882 million USD in 2023. This decline suggests deteriorating retained earnings or increased losses impacting the equity base.

Regarding net income, the company experienced positive financial results in 2018 and 2019, with reported and adjusted net income close to 3,000 million USD. This positive performance was followed by a significant negative shift in 2020, showing a substantial loss of -10,236 million USD. Negative net income persisted through subsequent years, although losses reduced in magnitude each year, reaching -74 million USD by 2023. The large losses recorded in 2020 and 2021 could be indicative of extraordinary events or operational challenges severely affecting profitability. The gradual improvement afterward suggests some recovery efforts or cost controls that helped mitigate losses.

The absence of divergence between reported and adjusted figures for both shareholders’ equity and net income indicates that deferred income tax adjustments did not materially alter the financial outcomes or were consistently applied without changing the core reported results.

Equity Trend

Stable and slightly increasing through 2019, followed by a substantial and ongoing decline through 2023, signaling erosion of shareholder value.

Profitability Trend

Profitability in 2018-2019 transitioned sharply to heavy losses from 2020 onward, with improvement in loss magnitude but no return to profitability by 2023.

Adjusted vs Reported Figures

No material difference between reported and adjusted data, indicating minimal impact from deferred income tax adjustments on the financial measures presented.

Net Profit Margin

The net profit margin exhibited a positive but declining trend from 16.69% in 2018 to 14.36% in 2019, followed by a sharp deterioration into negative territory in the years 2020 through 2023. The margin reached extreme negative values of -182.95% in 2020 and -497.96% in 2021, before partially recovering to -50.07% in 2022 and further improving to -0.34% in 2023. This pattern indicates significant volatility and operational challenges particularly during and immediately after 2020.

Financial Leverage

Financial leverage showed a continuous upward trend over the entire period. Starting from 1.73 in 2018, it increased consistently each year, reaching a peak of 7.32 in 2022 before slightly declining to 7.14 in 2023. The sharp rise between 2019 and 2022 suggests increased reliance on debt financing or other liabilities, implying a higher degree of financial risk being assumed over time.

Return on Equity (ROE)

Return on equity followed a trajectory similar to the net profit margin, with positive values in 2018 and 2019 at 12.9% and 11.79% respectively. From 2020, ROE turned sharply negative, reaching an extreme low of -86.24% in 2022. By 2023, ROE showed signs of near normalization with a value of -1.08%, indicating a reduction in losses but still a lack of profitability on shareholder equity.

Return on Assets (ROA)

Return on assets decreased from positive levels in 2018 and 2019 (7.43% and 6.64%) to negative territory beginning in 2020. The ROA remained negative across the subsequent years, though the magnitude of loss decreased progressively from -19.1% in 2020 to -0.15% in 2023. This reflects deteriorating asset efficiency during the peak negative years with gradual improvement toward minimal net losses relative to total assets by 2023.

Overall Insights

The data reflects severe financial stress beginning in 2020, consistent across profit margins, return measures, and an increasing leverage ratio. The leverage ratio's significant rise during this period points to increasing financial risk exposure, possibly due to external shocks or operational difficulties. The gradual improvement across profit margins, ROE, and ROA in 2023 suggests initial recovery efforts, though profitability remains weak and financial structure stressed. The persistent negative returns raise concerns about ongoing underlying business challenges that require monitoring and strategic intervention.

Net Income (Loss) Trends

The reported and adjusted net income figures are identical across all periods, suggesting no deferred tax adjustments. Initially, the company reported positive net income of $3,152 million in 2018 and $2,990 million in 2019. However, starting in 2020, there was a significant downturn with substantial losses, reaching -$10,236 million in 2020 and -$9,501 million in 2021. Although losses continued in the subsequent years, they lessened markedly to -$6,093 million in 2022 and further contracted to -$74 million in 2023. This indicates some recovery from the deep losses experienced at the height of the downturn.

Net Profit Margin Analysis

The net profit margin followed a consistent pattern with reported net income. Profit margins were positive at 16.69% in 2018 and declined to 14.36% in 2019, reflecting healthy profitability before the downturn. From 2020 onward, margins turned sharply negative, reaching extreme lows of -182.95% in 2020 and worsening further to -497.96% in 2021, which reveals that losses vastly exceeded revenues during this period. Margins improved significantly by 2022 to -50.07% and then further to -0.34% in 2023. This gradual improvement in profitability margins suggests a recovering operational performance, though still not producing a positive return by the end of the analyzed period.

Overall Financial Performance Insights

The data demonstrates a clear impact of adverse conditions beginning in 2020, which severely affected profitability and resulted in large net losses and deeply negative margins. The consistent identical values for reported and adjusted net income suggest the deferred tax impacts are either minimal or not separately recognized here. The gradual improvement in the last two years indicates some mitigation of losses and effort toward restoring profitability. However, the company remained in a loss position through 2023, with margins close to break-even but still negative.

Shareholders’ Equity Trends

There is a clear declining trend in both reported and adjusted shareholders’ equity from 2018 through 2023. The equity value decreased steadily from US$24,443 million in 2018 to US$6,882 million in 2023. The most significant declines occurred between 2019 and 2022, where equity dropped sharply from US$25,365 million to US$7,065 million. This reduction slowed somewhat in 2023, with a smaller decrease from US$7,065 million to US$6,882 million.

Financial Leverage Trends

The reported and adjusted financial leverage ratios mirror each other and exhibit a substantial increasing trend over the period analyzed. Starting at 1.73 in 2018, leverage rose moderately to 1.78 in 2019 before escalating sharply to 2.61 in 2020. This upward trajectory continued with a significant jump to 4.39 in 2021, peaking at 7.32 in 2022, and slightly declining to 7.14 in 2023. The sharp increase, particularly between 2019 and 2022, indicates a growing reliance on debt relative to equity.

Overall Insights

The simultaneous decline in shareholders’ equity alongside rising financial leverage suggests a reduction in net equity funding coupled with an increase in debt financing over the analyzed timeframe. This pattern may indicate increased financial risk due to higher debt burdens and diminished equity cushions. The stabilization observed in the final year's data, with a slight decrease in leverage and smaller equity drop, could suggest the beginning of a new phase or an attempt to stabilize capital structure.

The financial data indicates significant volatility and deterioration in the company's profitability and equity position over the analyzed periods.

Net Income (Loss)

The reported net income shows a positive trend in 2018 and 2019, with values of approximately 3.15 billion USD and 2.99 billion USD respectively. However, starting in 2020, there is a sharp decline resulting in substantial losses: a net loss of about 10.24 billion USD in 2020, followed by losses of 9.5 billion USD in 2021, 6.1 billion USD in 2022, and a markedly reduced loss of 74 million USD in 2023. This trend reflects severe operational or external challenges impacting profitability beginning in 2020, with a gradual improvement by 2023 though not returning to profitability.

Shareholders' Equity

The reported shareholders’ equity decreased consistently over the period. From 24.4 billion USD in 2018, it increased slightly to 25.4 billion USD in 2019 but then began a steady decline: 20.6 billion USD in 2020, 12.1 billion USD in 2021, 7.1 billion USD in 2022, and 6.9 billion USD in 2023. This persistent reduction underscores erosion in the company’s net asset base, likely associated with the series of large losses and potential asset impairments or other equity-reducing transactions.

Return on Equity (ROE)

ROE mirrors the profitability trend and equity depletion. The company delivered positive returns on equity in 2018 (12.9%) and 2019 (11.79%). From 2020 onwards, ROE turned deeply negative, reaching -49.8% in 2020, worsening to -78.24% in 2021 and further to -86.24% in 2022. In 2023, while still negative, the ROE improved significantly to -1.08%, consistent with the smaller net loss in that year. This pattern reflects the severe financial distress during 2020-2022 followed by partial recovery efforts or market improvements in 2023.

Overall, the data depicts a company experiencing a profound financial downturn starting in 2020, with drastic losses eroding shareholder equity and severely impacting returns. While the downward momentum slows and shows some signs of stabilization and recovery by 2023, the financial position remains weak, with near breakeven results and minimal equity. Careful monitoring and strategic measures remain essential for continued recovery.

The data presents a clear deterioration in financial performance over the period from November 30, 2018, to November 30, 2023. Reported and adjusted net income figures follow an identical pattern, indicating no discrepancies between reported and adjusted values for this dataset.

Net Income (Loss)

The company recorded positive net income in 2018 and 2019, with values of US$3,152 million and US$2,990 million respectively, showing a modest decline between these two years. However, from 2020 onwards, the net income shifted to significant losses. The loss peaked in 2020 at US$10,236 million, followed by a gradual reduction in losses over the next three years: US$9,501 million in 2021, US$6,093 million in 2022, and a substantial narrowing to a loss of US$74 million in 2023. This trend reflects a severe impact on profitability beginning in 2020, with a notable recovery trend after that year.

Return on Assets (ROA)

The ROA exhibits a similar trend to net income. In 2018 and 2019, ROA values were positive at 7.43% and 6.64% respectively, indicating effective asset utilization to generate profits. Starting in 2020, ROA became deeply negative, with a low of -19.1%. Although remaining negative, ROA improved slightly in subsequent years at -17.81% in 2021, -11.78% in 2022, and a significant recovery to nearly break even at -0.15% in 2023. This progression corresponds with the decreasing net losses, suggesting improving asset efficiency but still below the breakeven point.

Overall, the patterns reflect a major financial setback beginning in 2020, likely attributable to extraordinary circumstances impacting operations. The steady reduction in losses and improvement in ROA from 2021 through 2023 suggest strategic measures or market conditions supporting gradual recovery. However, by the end of the observed period, profitability and asset returns remain marginally negative, indicating ongoing challenges to fully restore previous financial health.