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December 16, 2005

Carnival reports record earnings

"It is a testament to the resilience of our cruise business that despite an approximate 50 percent increase in fuel costs for the quarter and the worst hurricane season in our history, we were still able to grow earnings by 20 percent to achieve record fourth quarter results," said Carnival Corporation & plc Chairman and CEO Micky Arison, announcing record net income for the quarter ended November 30, 2004.

For the full year, Arison said that increased pricing and a continued sharp focus on cost controls more than offset a $180 million year-over-year rise in fuel costs. He further stated, "All facets of our business, from contemporary to luxury, performed well overall during the past year, with guests booking in record numbers."

Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK) reported net income of $353 million, or $0.43 diluted EPS, on revenues of $2.6 billion for its fourth quarter ended November 30, 2005.

Net income for the fourth quarter of 2004 was $294 million, or $0.36 diluted EPS, on revenues of $2.2 billion.

Net income for the year ended November 30, 2005 was $2.3 billion, or $2.70 diluted EPS, on revenues of $11.1 billion, compared to net income of $1.9 billion, or $2.24 diluted EPS, on revenues of $9.7 billion for the same period in 2004.

Fourth quarter revenues increased by 14.4 percent driven by both a 9.1 percent increase in cruise capacity and a significant increase in cruise revenue yields (revenue per available lower berth day), partially offset by a stronger U.S. dollar relative to the euro and sterling.

Net revenue yields for the fourth quarter of 2005 increased 5.9 percent compared to the prior year.

Net revenue yields as measured on a local currency basis ("constant dollar basis") increased 6.8 percent over the same period last year, primarily due to higher cruise ticket prices and onboard revenues. Gross revenue yields increased 4.5 percent.

For the 2005 year, net revenue yields increased 6.5 percent (6.1 percent on a constant dollar basis).

Gross revenue yields increased 4.9 percent.

Net cruise costs per available lower berth day ("ALBD") for the fourth quarter of 2005 were up 3.8 percent compared to costs for the same period last year. On a constant dollar basis, net cruise costs per ALBD increased 4.9 percent from the same period last year primarily due to an approximate 50 percent increase in fuel prices. Excluding higher fuel costs, the company's 2005 fourth quarter net cruise costs per ALBD were approximately equal to the same period last year on a constant dollar basis. Gross cruise costs per ALBD increased 2.5 percent compared to the prior year.

2006 Outlook

Looking forward to 2006, Arison said, "We expect continued revenue yield growth in 2006 although probably not at the levels experienced during the last two years. As it stands today, advance booking levels for 2006 are ahead of the prior year on a capacity adjusted basis, with average pricing also higher than last year."

The company's 2006 guidance is based on exchange rates of $1.17 to the euro and $1.73 to the sterling versus weighted average rates of $1.25 and $1.83 in 2005. Given the strengthening of the U.S. dollar relative to the euro and sterling, constant dollar information is likely to give a more accurate picture of the performance of the company's cruise operations in 2006.

Based on bookings taken to date, the company expects that net revenue yields for 2006 will increase approximately 1 to 3 percent (2 to 4 percent on a constant dollar basis), compared to last year.

Net cruise costs per ALBD for 2006 are expected to be flat to up 2 percent (up 1 to 3 percent on a constant dollar basis), compared to 2005. The company's cost guidance for fuel is based on the current forward curve for all of 2006 of $322 per metric ton, which is approximately $175 million, or $0.21 per share, higher than the average prices for 2005. Excluding fuel, the company expects net cruise costs per ALBD to be flat to down 2 percent on a constant dollar basis.

The company's 2006 outlook for net cruise costs includes the impact of two accounting matters.

Commencing with the first quarter of 2006, the company will adopt the new stock-based compensation accounting standard and begin expensing stock options, which is expected to increase 2006 full year expenses by $58 million.

Also, commencing with the first quarter of 2006, the company will change the amortization period for dry-dock costs from one to two years, to two to three years. This change in estimate reflects the lengthening of the time between dry-docks, resulting from regulatory changes and technological enhancements to the company's ships. In 2006, this change is expected to reduce dry-dock amortization by approximately $40 million compared to normal levels of dry-dock amortization.

Based on the foregoing, the company believes that 2006 earnings per share will be between $3.00 and $3.10.

For the first quarter of 2006, the company expects net revenue yields to increase 1 to 2 percent (3 to 4 percent on a constant dollar basis), compared to last year. Net cruise costs per ALBD in the first quarter of 2006 are expected to increase between 6 to 7 percent (9 to 10 percent on a constant dollar basis), compared to 2005, primarily because of higher fuel costs. The company's cost guidance for fuel is based on recent forward prices for the first quarter of 2006 at $312 per metric ton, which is approximately $80 million, or $0.09 per share, higher than the average prices for the first quarter of 2005. Excluding fuel, the company's cost guidance for the first quarter of 2006 is for net cruise costs per ALBD to be up 3 to 4 percent, on a constant dollar basis, primarily due to the timing of advertising and other expenses. Based on these estimates, the company expects diluted earnings per share for the first quarter of 2006 to be in the range of $0.34 to $0.36.

The company has three ships scheduled for delivery in 2006--Holland America Line's 1,918-passenger Noordam in January, Princess Cruises' 3,100-passenger Crown Princess in May and Costa Cruises' 3,000-passenger Costa Concordia in June--which represent a 5.5 percent increase in capacity.

Earlier this week, the company announced an agreement with Italian shipbuilder Fincantieri for the construction of four new cruise ships--two of which are scheduled to be delivered in 2008 and two in 2009. Including these new ships, the company's capacity growth is expected to increase 8.0 percent in 2007, 8.2 percent in 2008 and 6.4 percent in 2009

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