P&O returns to profit

February 5, 2002 Posted: 1307 GMT

LONDON (CNN) -- P&O Princess Cruises, the target of a hostile takeover bid, returned to profit in the fourth-quarter as bookings improved.

But the London-based company, the world's third-largest cruise operator, said while passengers numbers are up, pricing pressures would continue to cut into its revenue. 

P&O said net income for the quarter ending December 31 totalled $16.3 million, or 2.4 cents per share, compared with a loss of $3.6 million, or a loss of 0.5 cents per share, in the same period a year earlier.

For all of 2001, P&O posted a net profit of $286.3 million, up from $274.1 million in 2000.

The company said net revenue yields, a measure of how much money a cruise company makes per passenger, from cruise packages and onboard sales fell 5 percent in the fourth quarter, and by the same amount for all off 2001, due to the impact on travel caused by the September 11 attacks in the U.S.  

P&O's chief executive Peter Ratcliffe said despite signs of recovery, net revenue yields are likely to continue to fall.

"We expect yields to be down by 8 percent on a like-for-like basis in the first quarter," he said in a statement. "Yields for the second and third quarters are likely to experience the same sort of pressures." 

Cruise operators have been attempting to cut costs to counter the slump in the sector, with consolidation seen as one way of surviving the global economic downturn.

Carnival, the world's largest operator, has launched a $5.02-billion hostile bid for P&O, in an effort to scuttle a planned $7.04-billion merger between P&O and Royal Caribbean, the world's second largest cruise operator.

Shareholders will vote on the Royal Caribbean bid on February 14.

P&O shares were down 0.3 percent at 402.5 pence in midday trading on Tuesday in London.