UBS Warburg's Cruise Pricing Survey saw strong results in mid-late March, with year-over-year Caribbean prices reflecting lower declines each week for the last three weeks in the month, according to analyst Robin Farley. She also notes that strong cost reduction has provided upside to CCL and RCL in Q1, suggesting there could be upside in POC's quarter as well.
Royal Caribbean preannounced its Q1'02 EPS of $0.25-$0.30 with expense reduction kicking in and net yields to be down 7-8%, instead of previous guidance of down 10%. Two unscheduled drydocks will have a $0.02-$0.03 per share impact on the quarter.
UBS Warburg's Q1 EPS estimate for P&O Princess is $0.03 versus the consensus of $0.01, based on management's conservative 8% yield decline guidance (11% for the Princess brand) and 6.6% decline in controllable costs per passenger cruise day. 'P&O Princess' booking curve is longer than CCL's and RCL's due to its focus on the premium market, so we don't expect as strong a Q1 yield recovery in its North American brand,' Farley writes. But, again, cost reduction may benefit POC. Based on the strong recent guidance from Carnival and Royal, Farley would not be surprised to see Princess management give Q2 and Q3 yield guidance better than Q1 levels.
UBS Warburg's net yield assumption for the year is for a 6.6% decline, reflecting Q2 and Q3 yields down 8% and 9%, respectively. 'If we were to reduce the yield decline for POC to roughly 5% for the year, which would be close to 7% for its North American capacity, that could add $0.19 to '02 EPS bringing estimates to $1.66, and $0.23 to our '03 estimate bringing it to $2.28. However, we note that POC redeployed roughly 12% of its '02 capacity, significantly more than RCL and CCL, so that will put additional pressure on POC yields,' Farley observes.