cruise operator, reported a widely expected slump in first-quarter profits yesterday, with earnings partly dented by lower cruise prices.

Pre-tax profits for the three months ending March fell 64 percent from the same period last year to $18.9 million.

Basic earnings per share for the company -- which was demerged from ports, logistics and ferry operator P&O last year -- fell to 2.6 cents for the quarter from 6.6 cents a year ago.

Shares in the company were up 2-3/4 pence, or 0.9 percent, at 300-1/4 pence in London, valuing the group at around 2 billion ($3.02 billion). The stock has outperformed the broader FTSE All Share Index by about nine percent since January.

Cruise operators such as P&O Princess, Carnival and Royal Caribbean have all felt the effects of the US economic slowdown on their revenues and earnings.

Royal Caribbean, the world's second biggest cruise group behind Carnival, said on Wednesday that first-quarter profits nearly halved from early 2000 as US economic weakness led to lower ticket prices.

"Their results were pretty much in line with expectations, and weren't as bad as Royal Caribbean,'' said a London-based fund manager, declining to be identified, whose portfolio includes UK transport and leisure stock.

P&O Princess -- whose Pacific Princess is a regular summer caller to Bermuda -- said the North American market remained competitive on pricing.

The group added that like-for-like net revenue yields were six percent lower, and forecast an overall decline in yields of two to three percent for 2001.

SG Securities analyst Ian Wild said P&O Princess' stock could benefit from more US interest rate cuts, designed to prevent further economic slowdown.

A story in yesterday's Business section incorrectly stated that P&O, not P&O Princess, operated Pacific Princess .

Slow season: P&O Pincess' Pacific Princess BUSINESS BUC