Carnival Corp. & plc (NYSE:CCL)

Return on Assets (ROA)

The Return on Assets exhibited a positive trend in the initial two years, decreasing slightly from 7.43% in 2018 to 6.64% in 2019. However, starting in 2020, there was a significant and sustained decline, with ROA turning negative at -19.1%. This negative performance continued through subsequent years, although the severity of the decline lessened gradually, improving from -17.81% in 2021 to -0.15% in 2023. This pattern indicates increasing asset inefficiency and losses during the 2020-2022 period, followed by signs of recovery in 2023.

Financial Leverage

Financial leverage increased steadily over the entire period. Beginning at a ratio of 1.73 in 2018, it rose moderately to 1.78 in 2019. A more pronounced increase occurred from 2020 onward, reaching 2.61 and then nearly doubling again in 2021 to 4.39. The leverage continued to rise sharply to 7.32 by 2022, before slightly decreasing to 7.14 in 2023. The increasing leverage indicates a growing reliance on debt financing, particularly after 2019.

Return on Equity (ROE)

Return on Equity showed a downward trajectory overall. It decreased from 12.9% in 2018 to 11.79% in 2019, followed by a dramatic negative shift in 2020, reaching -49.8%. This severe negative return intensified in the next two years, plummeting to -78.24% in 2021 and -86.24% in 2022. By 2023, the ROE improved significantly but remained negative at -1.08%. The considerable fluctuations and deep negative values suggest substantial challenges in generating profitable equity returns during the 2020-2022 period, with tentative recovery by 2023.

The financial performance indicators over the analyzed period demonstrate significant volatility and stress, particularly around the years 2020 to 2022, with some signs of recovery in 2023.

Net Profit Margin

The net profit margin experienced a marked decline starting from a positive 16.69% in late 2018 and falling to 14.36% in 2019, indicating slightly reduced profitability. However, in 2020, the company suffered a drastic loss, with net profit margin plunging to -182.95%, further deteriorated to -497.96% in 2021. The margins improved somewhat in 2022 to -50.07%, and by 2023, the loss was minimal at -0.34%, suggesting a near return to break-even status.

Asset Turnover

Asset turnover remained relatively stable in 2018 and 2019 at around 0.45 to 0.46, indicating consistent efficiency in using assets to generate revenue. This efficiency drastically declined in 2020 and 2021 to 0.1 and 0.04 respectively, reflecting decreased operational activity or revenue generation capabilities. Recovery began in 2022 with an increase to 0.24, progressing further to 0.44 in 2023, nearly reverting to pre-crisis levels.

Financial Leverage

Financial leverage increased steadily from 1.73 in 2018 to 1.78 in 2019, then surged significantly to 2.61 in 2020, nearly doubling the following year to 4.39. It continued its upward trajectory reaching 7.32 in 2022, before slightly decreasing to 7.14 in 2023. This pattern implies a growing reliance on debt financing throughout the period, with a peak in the financial burden during the crisis years and a minor reduction as the company stabilized.

Return on Equity (ROE)

The return on equity mirrored the trends seen in net profit margin, starting from a healthy 12.9% in 2018 and declining to 11.79% in 2019. It turned sharply negative at -49.8% in 2020, worsening to -78.24% in 2021, and reaching its lowest at -86.24% in 2022. An improvement is observed in 2023, with ROE rising significantly to -1.08%, indicating recovery efforts but still not generating positive returns for equity holders.

Overall, the data reveals that the company faced severe operational and financial difficulties beginning in 2020, likely due to extraordinary external factors impacting profitability and asset utilization. These challenges were accompanied by a marked increase in financial leverage, highlighting increased borrowing. The gradual recovery in 2023 is evident across most indicators, showing stabilization but still reflecting residual impacts on profitability and returns to shareholders.

Tax Burden

The tax burden ratio remained stable and high at 0.98 for the years 2018 and 2019. After 2019, no data is available to observe any further trend or changes.

Interest Burden

Interest burden held steady at 0.94 in 2018 and 2019, indicating consistent interest expenses relative to operating income during those years. However, in 2023, a negative interest burden ratio of -0.03 is recorded, reflecting an atypical situation possibly linked to interest income or financial gains rather than expenses. Data for the intervening years is missing, limiting trend analysis during that period.

EBIT Margin

The EBIT margin presented a declining trend from 18.01% in 2018 to -36.74% in 2022, with a dramatic trough in 2020 and 2021 at -167.26% and -415.15% respectively, indicating severe operating losses during those years. In 2023, a recovery is evident with the margin improving to 9.28%, although it remains below the positive levels seen pre-2020.

Asset Turnover

Asset turnover showed a decrease from 0.45 in 2018 to a low of 0.04 in 2021, reflecting a significant decline in the efficiency of asset utilization to generate revenue. A gradual recovery is observed afterward, reaching 0.44 by 2023, nearly returning to pre-2018 levels, suggesting improved operational activity.

Financial Leverage

Financial leverage steadily increased from 1.73 in 2018 up to a peak of 7.32 in 2022, indicating a growing reliance on debt in the capital structure. In 2023, financial leverage slightly declined to 7.14 but remained substantially elevated compared to earlier years, signifying increased financial risk.

Return on Equity (ROE)

ROE followed a similar pattern to EBIT margin, declining from a positive 12.9% in 2018 to deeply negative values ranging from -49.8% in 2020 to a lowest point of -86.24% in 2022. By 2023, ROE shows a marked improvement to -1.08%, reflecting a near return to break-even profitability for equity holders, albeit still negative.

The financial data reveals significant fluctuations in key profitability and efficiency metrics over the observed period. The analysis focuses on net profit margin, asset turnover, and return on assets (ROA), providing insights into the company's operational performance and financial health.

Net Profit Margin

Initially, the company maintained a positive net profit margin, declining from 16.69% in 2018 to 14.36% in 2019. However, from 2020 onward, the margin turned sharply negative, reaching an extreme low of -497.96% in 2021. Although there was an improvement afterward, the margin remained negative in 2022 and 2023 at -50.07% and -0.34% respectively. This indicates substantial losses primarily during 2020 and 2021, with a gradual recovery trend evident in the subsequent years.

Asset Turnover

Asset turnover was relatively stable around 0.45 between 2018 and 2019, reflecting moderate efficiency in generating revenue from assets. A steep decline occurred in 2020 and 2021, with ratios falling to 0.10 and 0.04 respectively, signaling a significant reduction in asset utilization. Recovery took place in 2022 and 2023 as the ratio increased to 0.24 and 0.44, signaling a return toward pre-decline efficiency levels.

Return on Assets (ROA)

ROA followed a similar pattern to net profit margin, with positive values of 7.43% and 6.64% in 2018 and 2019, respectively. The ratio turned sharply negative in 2020 (-19.10%) and remained deeply negative in 2021 (-17.81%), indicating substantial asset inefficiency and losses. Slight improvements occurred in 2022 (-11.78%) and further in 2023 (-0.15%), suggesting progressive but incomplete recovery of asset profitability.

Overall, the data exhibits a considerable downturn beginning in 2020, likely due to extraordinary challenges impacting profitability and asset efficiency. Although recovery efforts are evident, full restoration to pre-2020 levels had not been achieved by 2023, with profitability metrics still marginally negative. The improving asset turnover indicates operational normalization, but the persistent negative returns highlight ongoing challenges in generating profit from assets.

The financial data indicates significant fluctuations and challenges over the observed periods, particularly from 2020 onwards.

Tax Burden and Interest Burden

The tax burden remained steady at 0.98 in the first two years (2018 and 2019), after which the data for subsequent years is absent. The interest burden also held stable at 0.94 during 2018 and 2019 but dropped dramatically to -0.03 in 2023, suggesting a possible negative impact from interest expenses or related financial issues in the latest year reported.

EBIT Margin

The EBIT margin showed a significant downward trend starting from 18.01% in 2018 and declining to 15.69% in 2019. From 2020 onward, the margin turned deeply negative, reaching as low as -415.15% in 2021, reflecting severe operational losses or write-downs during this period. Though some recovery appears in 2023 with a margin improving to 9.28%, the margin remains well below pre-2020 levels.

Asset Turnover

The asset turnover ratio was relatively stable at 0.45-0.46 in 2018–2019, indicating consistent asset utilization. However, it dropped sharply during 2020 and 2021 to 0.10 and 0.04 respectively, implying a considerable decline in sales relative to assets, likely due to economic or operational disruptions. Subsequently, it improved to 0.24 in 2022 and almost returned to initial levels at 0.44 in 2023, signaling a recovery in asset efficiency.

Return on Assets (ROA)

The ROA followed a similar pattern, starting at 7.43% in 2018 and decreasing slightly to 6.64% in 2019. From 2020 to 2023, the ROA was negative, indicating losses and operational difficulties. The worst performance occurred in 2020 with -19.10%, and although there was gradual improvement afterward, ROA remained below zero, ending at -0.15% in 2023, which indicates the company was close to breaking even but had yet to achieve a positive return on its assets.

Tax Burden

The tax burden ratio remained steady at 0.98 in both 2018 and 2019. No data is available for subsequent years, preventing analysis beyond 2019.

Interest Burden

The interest burden ratio maintained a consistent level of 0.94 in 2018 and 2019. Data is missing for the years 2020 to 2022, with a notable sharp decline to -0.03 reported in 2023, indicating a significant adverse impact from interest expenses in that year.

EBIT Margin

The EBIT margin experienced a decreasing trend from 18.01% in 2018 to 15.69% in 2019. This was followed by extreme negative values in 2020 (-167.26%) and 2021 (-415.15%), suggesting substantial operational losses. Although still negative, the margin improved to -36.74% in 2022 and further to 9.28% in 2023, indicating a recovery phase.

Net Profit Margin

The net profit margin shows a similar pattern to the EBIT margin. Starting at 16.69% in 2018, it decreased to 14.36% in 2019 before plunging into significant losses at -182.95% in 2020 and -497.96% in 2021. The losses lessened to -50.07% in 2022, with a near break-even performance of -0.34% in 2023, signaling an ongoing recovery trend in profitability.