Royal Caribbean Cruises Ltd., the world's number two cruise operator, said that first quarter net profits halved amid an economic slowdown and that earnings were likely to stay weak in 2001. Royal Caribbean said
net income fell to $52.5 million in the first three months of 2001 from $105.5 in the same period of 2000. Revenues rose to $726.9 million from $707.8 million, mainly due to higher capacity. Earnings per share fell to $0.27 from $0.55. "Although this year's booking period started out strong, we are disappointed that the momentum did not continue as long as we would have liked," said chairman and chief executive Richard Fain
. "As we all know, the slowdown of the economy is affecting consumer spending. This impact, coupled with increased industry capacity, continues to put pressure on pricing," Fain said. "As a result, we now forecast yields for the last nine months of 2001 to be down two percent on a year-over-year basis," he added. Yields are net revenues per available passenger cruise day.
But Fain added that, while there would be pressures on prices: "We believe the long-term fundamentals of the industry remain intact." "We firmly believe our young, innovative fleet is competing aggressively in this market. Our product offering is effectively attracting first-time cruisers and providing new options to our large base of loyal guests," he said.
Royal Caribbean said that the rise in first quarter revenues was mainly due to an increase in capacity, offset by a decline in yields. But yields were down 11 percent in the quarter, mainly because of high bookings for the Millennium at the start of 2000. "Excluding the impact of the Millennium event, yields were down four percent," it said. - (Reuters)