P&O Sinks On Bearish Cruise Outlook

Shares in British shipping company P&O sank on Friday after the group warned that additional capacity and a competitive U.S. market would hit revenue yields for its cruise sector, which it plans to spin off as a separate company in October.

The group failed to reassure the market with news that its cruising division, P&O Princess, boosted its operating profit by four percent to $60.4 million in the first quarter of 2000. By mid-morning, the company's shares had slid 12 percent.

Analysts said they were preparing to cut profit forecasts, after the Peninsular and Oriental Steam Navigation Co. said its net revenue yields were likely to be lower in 2000 than in 1999. Others said although they would follow suit, the group's underlying business remained strong.