P&O Princess Cruises (POC) has reported internet revenue of $89.0 million, or $0.52 per ADS (4 shares), on revenues of $647.6 million for the second quarter ended June 30, 2001, in comparison with internet revenue of $82.4 million, or $0.48 per ADS, on revenues of $642.0 million for the second quarter of 2000.
Second-quarter outcomes included a $1.9 million loss associated to the sale of the Pacific Princess to an undisclosed purchaser, for between $15-$20 million (the ship will likely be leased again by Princess Cruises by means of Nov. 2002).
Yields in the course of the interval had been three % decrease than final yr, which the corporate attributed to “aggressive buying and selling circumstances, significantly in Alaska.” Passenger cruise days had been up 6.3 %, with cruise days basically static within the North American market, and up 19 % within the worldwide markets. Revenues elevated extra slowly, at 0.9 % general, on account of “decrease yields and hostile change charges.”
POC reported internet revenue of $107.0 million, or $0.62 per ADS, on revenues of $1.19 billion for the six months ended June 30, 2001, in comparison with internet revenue of $127.1 million, or $0.74 per ADS, on revenues of $1.16 billion for a similar interval of 2000. Yields had been down 4 % for the primary half of 2001 versus the earlier yr.
Commenting on 2001 as a complete with greater than 90 % of capability booked for the yr, the corporate acknowledged, “We anticipate that the group’s internet income yields for the third quarter will likely be round 4 % decrease, in contrast with the third quarter of 2000. For the yr as a complete, we anticipate a discount in group internet income yields of three %” – consistent with beforehand reported estimates.
Stated Princess CEO Peter Ratcliffe, “In 2000, our yields had been down three % in comparison with 1999, and in 2001, our yields will likely be down one other three %. However trying ahead to 2002 we’re cautiously optimistic that there could also be some enchancment, some component of stabilization … that we gained’t see a serious additional deterioration of yields at this stage.”
Ratcliffe continued, “Our present estimate is that capability in the USA will improve by 10 % subsequent yr, which continues to be a major improve.” He stated Princess is continuing below the belief that “a aggressive worth state of affairs within the U.S.” will proceed subsequent yr.
Ratcliffe defined that the brand new Golden Princess and Star Princess would symbolize larger onboard income potential in 2002 than the remainder of the fleet (with extra ocean-view ana balcony cabins than the fleet common), whereas Princess was lowering its charge of progress within the aggressive U.S. market by transferring the Crown Princess and Ocean Princess to POC European manufacturers, and promoting the Pacific Princess.
“We’ll scale back our charge of progress (in North America) to roughly 10 % subsequent yr, the vast majority of which is able to happen within the first quarter.”
Commenting on the relative power of the present U.Okay. cruise market versus North America, Ratcliffe defined, “We now have held a management place within the U.Okay. for a few years, and we’re the one firm introducing purpose-built ships for the U.Okay. market. We now have traditionally had the identical ranges of profitability within the U.Okay. and U.S. markets, however the U.S. now has a extra aggressive economic system, and we don’t have the identical extent of competitors within the U.Okay.”
“The general tone of enterprise for our operations within the U.Okay., Germany and Australia stays optimistic,” stated the corporate. Ratcliffe stated yields had been “up a little bit” in non-U.S. markets. In Germany, he added, “Our AIDA model is doing very nicely. The opposite operation, with a barely older ship, the Arkona, has not really been doing nicely.” He stated the addition of newer vessels to the German sector, with extra balcony and outdoors cabins producing extra income, can have a optimistic influence trying ahead. He stated the German operation wouldn’t obtain U.S./U.Okay. ranges of profitability in 2002, however “will develop shortly” to these ranges.
Explaining the technique of protecting each the river cruise and deep-sea cruise market with its new German model, A’Rosa, Ratcliffe defined, “In Germany, river cruising is definitely fairly vital. The folks we wish to entice to our extra destination-oriented deep-sea ships are the exact same folks which can be on the river. Riverboats solely value about $15 million apiece, and by having a typical model for each the river and deep-sea cruises, we mainly use the river cruises as a advertising and marketing instrument to get folks into the deep-sea market.”
POC has additionally launched into a long-term plan to scale back prices by 10 % by 2005, with the full-year aim of two % for 2001, based on Ratcliffe. Prices had been decreased on a per unit foundation by 5 % within the second quarter, and by a charge of three % for the yr so far. Each POC’s U.S. and U.Okay. workplaces have been relocated to scale back the associated fee construction, with the closing of the London department not too long ago introduced. Different financial savings arose from integrating buying and different programs, administration motion, and economies of scale.
In 2002, “financial circumstances will likely be an element,” stated the corporate, “however with anticipated additional progress on our cost-reduction program, we imagine we’re nicely positioned to compete successfully in North America.”
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