Carnival Corp. & plc (NYSE:CCL)

The financial data indicates significant fluctuations in the company's profitability and capital efficiency over the six-year period.

Net Operating Profit After Taxes (NOPAT)

The company experienced a peak in NOPAT of 3,339 million USD in 2018, followed by a slight decline in 2019 to 3,226 million USD. From 2020 onwards, there was a substantial downturn, with NOPAT turning negative at -9,312 million USD in 2020, improving slightly to -7,863 million USD in 2021 and further to -4,485 million USD in 2022. In 2023, a recovery is evident with NOPAT returning to a positive figure of 2,207 million USD.

Invested Capital

Invested capital showed a generally increasing trend from 2018, rising from 35,074 million USD to a peak of 49,017 million USD in 2020. Thereafter, invested capital declined consecutively to 46,517 million USD in 2021, 44,143 million USD in 2022, and further to 39,428 million USD in 2023. This suggests a contraction in the capital base following the peak year.

Return on Invested Capital (ROIC)

ROIC decreased from 9.52% in 2018 to 8.42% in 2019, followed by a sharp decline into negative territory from 2020 through 2022, reaching the lowest point at -19% in 2020. There was gradual improvement in ROIC over the next two years, rising to -16.9% in 2021 and -10.16% in 2022. By 2023, ROIC returned to a positive value of 5.6%, indicating a partial recovery of capital efficiency.

Overall, the data reflects a period of financial distress for the company beginning in 2020, with significant negative profitability and declining return metrics alongside a peak and subsequent reduction in invested capital. The improvements in 2023 suggest the commencement of financial stabilization and a turnaround in operational effectiveness.

The analysis of the annual financial data reveals significant fluctuations and trends in key financial ratios over the observed periods.

Operating Profit Margin (OPM)

The operating profit margin showed a declining trend from 17.99% in 2018 to 15.86% in 2019. This was followed by a dramatic downturn resulting in highly negative margins of -166.71% in 2020 and further deteriorating to -413.03% in 2021. Thereafter, there was an improvement, with the margin increasing to -36.78% in 2022 and turning positive at 8.56% by 2023. This pattern indicates severe operating challenges during the years 2020 and 2021, with a gradual recovery starting in 2022.

Turnover of Capital (TO)

The turnover of capital remained stable at 0.54 in both 2018 and 2019. However, it sharply declined to 0.11 in 2020 and further to 0.04 in 2021, reflecting reduced efficiency in capital utilization during these years. A recovery commenced in 2022 with a ratio of 0.28, and by 2023 it returned to 0.55, marginally exceeding the level observed in the pre-crisis years. This rebound suggests an improvement in the company's asset management post-2021.

Effective Cash Tax Rate (1 – CTR)

The effective cash tax rate was consistently high throughout the period, starting at 98.31% in 2018 and marginally decreasing to 97.68% in 2019. It reached a full 100% from 2020 through 2022, implying the company was effectively paying the full amount of its cash tax liabilities during these years. Notably, in 2023, this metric increased substantially to 119.35%, which could imply an increase in cash tax payments relative to earnings or changes in tax treatment.

Return on Invested Capital (ROIC)

The return on invested capital exhibited a declining trend from a positive 9.52% in 2018 to 8.42% in 2019. Subsequently, it turned negative in 2020 at -19%, deteriorating further to -16.9% in 2021 and -10.16% in 2022, signaling poor returns and potential value destruction on invested capital during this interval. The return improved to 5.6% by 2023, suggesting a partial recovery in generating returns from the capital employed.

In summary, the data indicates that the company experienced substantial operational and capital efficiency challenges during 2020 and 2021, presumably related to extraordinary circumstances affecting business performance. Following these periods, there are clear signs of gradual recovery across all measured indicators by 2023, with operational profit margins turning positive, capital turnover rebounding to previous levels, and returns on invested capital improving though still below initial levels. The sustained high and increasing effective cash tax rate may warrant further analysis to understand its impact on cash flows and profitability.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes displayed a declining trend from 2018 to 2020, dropping from 3,396 million USD in 2018 to a significant loss of 9,328 million USD in 2020. This negative trend continued in 2021 with a loss of 7,881 million USD but improved somewhat in 2022, reducing the loss to 4,476 million USD. By 2023, there was a notable recovery with a positive profit of 1,849 million USD, indicating a turnaround in operating profitability.

Revenues

Revenues initially increased from 18,881 million USD in 2018 to 20,825 million USD in 2019, demonstrating growth. This was followed by a dramatic decline in 2020 to 5,595 million USD and further decline to 1,908 million USD in 2021, reflecting a significant contraction. Revenues then started to recover in 2022, reaching 12,168 million USD, and continued this positive momentum into 2023, achieving 21,593 million USD, which is slightly above the 2019 level.

Operating Profit Margin (OPM)

The operating profit margin mirrored the volatility seen in net operating profit and revenues. The margin decreased from 17.99% in 2018 to 15.86% in 2019, still remaining positive but declining. However, in 2020 and 2021, the operating margin sharply deteriorated into large negative values of -166.71% and -413.03% respectively, indicating severe operational losses relative to revenues. There was some improvement in 2022 as the margin narrowed its negative value to -36.78%, and by 2023, the margin returned to positive territory at 8.56%, marking a substantial recovery but not yet reaching pre-2020 levels.

Overall Analysis

The data reveals a clear impact of adverse conditions starting in 2020, reflected by significant drops in revenues and dramatic losses in net operating profit and operating profit margin. This period of distress shows a severe operational and financial downturn. However, beginning in 2022, a recovery phase is evident with increasing revenues, reduced losses, and a return to profitability by 2023. Despite this recovery, the operating margin in 2023 remains below those seen in 2018 and 2019, suggesting the company has not yet fully restored its prior efficiency and profitability levels.

Revenues

Revenues exhibited a notable decline starting from the fiscal year ending November 2019. After increasing from $18,881 million in 2018 to $20,825 million in 2019, revenues sharply dropped to $5,595 million in 2020 and further decreased to $1,908 million in 2021. This represents a significant contraction likely influenced by extraordinary conditions during this period. Subsequently, there was a strong recovery with revenues rising to $12,168 million in 2022 and further increasing to $21,593 million in 2023, surpassing pre-2020 levels.

Invested Capital

Invested capital showed an overall increasing trend from 2018 to 2020, rising from $35,074 million to a peak of $49,017 million in 2020. Following this peak, invested capital gradually decreased over the next three years, declining to $46,517 million in 2021, $44,143 million in 2022, and further to $39,428 million in 2023. This decline during the latter period may suggest efforts to optimize capital deployment or adjust asset levels in response to changing operational conditions.

Turnover of Capital (TO)

The turnover of capital ratio remained stable at 0.54 in both 2018 and 2019, indicating consistent efficiency in revenue generation relative to invested capital during these years. However, there was a sharp decrease to 0.11 in 2020 followed by a further decline to 0.04 in 2021, reflecting reduced efficiency likely attributable to the significant drop in revenues coupled with increased invested capital. The ratio began to improve in 2022, rising to 0.28, and returned to a pre-pandemic level of 0.55 in 2023, signaling a restoration of operational efficiency alongside the revenue recovery and reduction in invested capital.

Cash Operating Taxes

Cash operating taxes increased from 57 million US dollars in 2018 to 77 million in 2019. Subsequently, there was a sharp reversal resulting in negative amounts of -15 million and -17 million for 2020 and 2021, respectively. The value turned positive at 10 million in 2022 but then dropped precipitously to -358 million in 2023. This pattern indicates significant fluctuations and possible tax refunds or credits in the latter years, particularly in 2023 where a substantial negative figure suggests a major tax benefit or adjustment.

Net Operating Profit Before Taxes (NOPBT)

NOPBT showed a declining trend from 3396 million US dollars in 2018 to 3303 million in 2019. This was followed by a sharp decline into negative territory in 2020 (-9328 million) and 2021 (-7881 million), reflecting considerable operating losses. Although losses continued in 2022 (-4476 million), there was a notable recovery in 2023, with a positive NOPBT of 1849 million. This suggests the company experienced severe operational challenges beginning in 2020 but started a recovery phase as of 2023.

Effective Cash Tax Rate (CTR)

The effective cash tax rate increased from 1.69% in 2018 to 2.32% in 2019. No data is available for 2020, 2021, and 2022. However, for 2023, the effective cash tax rate is reported as -19.35%, which is a substantial negative rate. This negative rate aligns with the negative cash operating taxes in 2023 and implies the company benefited from significant tax credits or refunds, likely related to prior losses or other tax planning mechanisms during the years of operational difficulty.