OSLO (Reuters) - Royal Caribbean Cruises, the world's number two cruise operator, beat analyst forecasts yesterday with first-quarter earnings per share in line with a year earlier, but said the outlook was tough.

The Norwegian-American, Miami-based luxury ship operator, and a regular caller to Bermuda, reported January-to-March earnings per share (EPS) of $0.27, the same as in the first quarter of 2002, despite a slump in the global travel business.

Eight analysts in a Reuters survey had forecast EPS would slip to $0.23, despite expected higher sales, reflecting price pressure in a fiercely competitive cruise market.

Operating revenue came in at $880 million, higher than the $800 million in the year-earlier period but slightly weaker than the $909 million forecast by analysts.

It said the net yield, or net revenue per passenger per cruise day, rose 3.9 percent in the first quarter but it forecast the yield would fall by six to nine percent in the second because of weak bookings linked to the war in Iraq.

After a better-than-expected 10.6 percent passenger yield rise in the fourth quarter, RCCL had said in January that net yields would rise by two to four percent in the first quarter.

"As expected, the company cuts it second quarter guidance, but I think a six to nine percent fall in the net yield is in the higher range of what the market had anticipated," said analyst Terje Fatnes at Enskilda Securities in Oslo.

"The most important question now is what effect that will have on the third quarter, which accounts for 60 percent of annual earnings," Fatnes said, sticking to a sell recommendation for the stock "due to the uncertain market."

Shares in RCCL, which has lost a battle against Carnival to take over rival P&O Princess, traded up 0.4 percent at 117 Norwegian crowns ($16.33) on the Oslo bourse at 1316 GMT, weaker than a 1.8-percent gain in the Oslo benchmark index.

"The figures are fair - marginally stronger than consensus - but guidance is not so good," said analyst Dag Fjeldstad at DnB Markets in Oslo.

"The second quarter looks grim and will probably make us downgrade our estimates," said Fjeldstad, adding that the first-quarter report could also prompt DnB to reduce its "hold" recommendation on RCCL.

RCCL, the world's number two cruise operator after industry leader Carnival Corp, said it was difficult to provide guidance for the rest of 2003 but that it had seen an improvement in bookings since the end of the war in Iraq.

The cruise sector has been struggling with a sluggish market since the September 11 attacks in the United States in 2001, and this year the war in Iraq and worries about the deadly SARS virus have further hit passenger volume.