2001 Maritime

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February 15, 2001

P&O Princess Cruises reports $373 million profit
Peter Ratcliffe, CEO of P&O Princess Cruises called 2000 "a successful and profitable year," reporting an operating profit for the year of $373.6 million, (representing a return on capital of 12.7%) and 22% growth in passenger cruise days.

For the fourth quarter, P&O Princess reported an operating profit of $15.9 million and a 26% increase in passenger cruise days.

Net yields for the quarter, though, were down 13% , reflecting a competitive trading situation in the fourth quarter.''

"While we believe that trading conditions will remain competitive in 2001, the company looks forward to an improving situation,'' said Ratcliffe.

For the year 2000 as a whole, passenger cruise days increased by 22% to over 8.7 million. Within this, Princess grew by 12% in North America with the introduction of Ocean Princess in February, and P&O Cruises by 32% in the U.K. with introduction of Aurora in April. The remaining increase in passenger carryings resulted from the acquisitions of the German businesses AIDA, in November 1999, and Seetours, in April 2000.

Princess had a strong first quarter and another successful summer season in Alaska and Europe. But pricing conditions were challenging for Princess in the Caribbean and transcanal trades in the fourth quarter.

In the U.K., P&O Cruises performed well, enjoying revenue stability after Aurora added approximately 45% to capacity from April.

AIDA also performed well, with higher yields than achieved in the previous year, prior to acquisition.

Overall, net revenue yields for the group compared to 1999 were, on a like for like basis, 4% lower excluding on board revenue, and 3% lower including on board revenue, with the reduction resulting mainly from the lower yields experienced in the fourth quarter. Total operating profit for the year was $373.6 million against $388.3 million for 1999, reflecting the lower yields, higher fuel prices which increased costs by some $30 million, adverse exchange rate movements which impacted operating profit by $6 million and a $7 million net reduction in the benefit of Millennium cruises, offset by an underlying reduction in unit costs.

Trading conditions for the first quarter of 2001 have remained competitive, particularly in the Caribbean. But, according to Ratcliffe they are "improved compared to those for the fourth quarter of 2000." Princess has experienced a significantly lower level of yield reduction than in the previous quarter.

Ratcliffe noted that the 2001 results "will benefit from the reduction in our tax rate from 13% to around 5%. We expect to elect for the new U.K. tonnage tax regime during the year and, although we may not enter the regime until 2002, our tax charge will benefit immediately as we will no longer be required to provide for deferred tax on U.K. profits." Business outlook

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