P&O has reported that its cruise division (Princess Cruises and P&O Cruises) generated operating profits of 216.1 million pounds (approximately $352.2 million) on revenues of 1,141.1 million pounds ($1.9 billion) for the year ended Dec. 31, 1998, compared to operating profits of 177.7 million pounds ($290 million) on revenues of 1,020.1 million pounds ($1.7 billion) in 1997.

P&O does not report net earnings for its cruise division. But the group as a whole, which includes ferries, ports and logistics, cargo shipping, and property and related businesses, posted net earnings of 415 .9 million pounds ($678 million) on revenues of 5,911.7 million pounds ($9.6 billion) for 1998.

For 1998, cruising represented 19.3 percent of P&O's total sales, while operating profits from cruise operations represented 38.5 percent of total operating profits for the group.

According to Cruise Industry News' estimates, total cruise costs and expenses were 81.1 percent of total cruise revenues for P&O, compared to 72.8 percent for Carnival Corporation, 81.5 percent for Royal Caribbean International, and 88.6 percent for Norwegian Cruise Line.

P&O's operating margin was 18.9 percent compared to 27.2 percent for Carnival, 18.5 percent for RCI, and 11.4 percent for NCL.

Also according to this newsletter's estimates, P&O's cruise ships generated $422.73 in revenue per passenger day which is by far the highest average in the industry. But P&O also had the highest total costs per passenger day at $342.68.

If ranked by total revenue, P&O ranks as the third largest cruise company in the world with 1998 revenues of $1.9 billion, compared to $3 billion for Carnival, and $2.6 billion for RCI.

The fourth largest company is NCL, which posted 1998 revenues of $767 million, followed by Star Cruises with $282.6 million.

Lord Sterling, chairman of P&O, commented that Princess had an exceptional year in 1998 and that P&O Cruises also had a record year. He further said that cruises, ferries and ports will continue to be core divisions of the company.

Lord Sterling also said that the cruise industry continues to develop strongly and that the future potential for cruising not only continues to grow in the United States, but also in Europe.

In related news, P&O is reported to be in negotiations with Mitsubishi Heavy Industries for a 100,000-ton newbuilding, while Princess is negotiating with Fincantieri for a new generation of 83,000-ton vessels.