Royal Olympic Cruises (ROC) has reported net income of $9.3 million, or $0.66 per share, on revenues of $52.3 million for its third quarter ended Aug. 31, 1998, compared to net income of $9.2 million, or $1.19 per share, on revenues of $43.1 million last year.

ROC attributed the earnings to lower rates achieved this year with more European passengers to compensate for fewer North American passengers. The company has also cut back its winter program in the Caribbean from three to two ships citing concerns with the North American market.

Meanwhile, ROC's shares were languishing at around $3.75 on the NASDAQ, following its IPO at $15 earlier this year, resulting in some outspoken criticism of ROC's management from analysts.

At press time, the market evaluation of the company was less than one-third of its liquidation value, according to one analyst, who also said that ROC's management had badly missed the forecasts made when the company went public.

Mostly, the new CEO, Vasilios Kapetanakos, and the new CFO, Salomon Toledano, who came aboard in September, both made a point of not being responsible for the third-quarter results and studying the company before making decisions about the future. Needless to say, these types of answers did not sit well with many analysts, some of whom also complained about ROC's lack of communication.

Neither Kapetanakos nor Toledano would say if the winter season would be profitable and a budget for 1999 will only be available by the end of November.

Meanwhile, there are also rumors that the company is considering buying back its owns shares, although management itself apparently is limited to 100,000 shares.

Some analysts went so far as to suggest that it may be in everybody's best interest to take the company private or sell it to Carnival Corporation. (ROC is one product category that would fit into the Carnival family, but Carnival's previous engagement with Epirotiki suggests that Carnival may only be interested if it gains full control.)

Kapetanakos said that ROC is making long-term investments and that management's focus is "to improve the value of the company" which he intends to do by "showing better results in the future."

Nevertheless, analysts were concerned about the possibility of a deteriorating demand situation with pricing going down in the third quarter and the cutback to two ships in the winter season. There were also concerns about the apparent contradiction between ROC's marketing and sales management in the United States having allegedly reported that bookings were up, while Piraeus said American bookings were down.

Toledano attributed part of the drop-off of North American passengers to a lack of air seats and said that this was another issue that ROC has to tackle.

ROC carried 55,439 passengers for 360,102 passenger cruise days and a load factor of 88 percent in its third quarter this year, compared to 50,318 passengers, 254,790 days and a load factor of 88 percent last year.

Nine Months

For the nine-month period, ROC reported net income of $4.4 million, or $0.36 per share, on revenues of $90.8 million this year, compared to net income of $3.2 million, or $0.41 per share, on revenues of $79.7 million for the same period last year.

For the nine-month period, ROC reported 92,449 passengers for 596,418 passenger cruise days and a load factor of 77.5 percent this year, compared to 85,990 passengers, 484,475 passenger cruise days, and a load factor of 82.2 percent last year.

Margins

While the real numbers may have been down, ROC still posted a remarkable net margin of 17.8 percent for its third quarter of 1998, compared to 21.3 percent last year.

For the nine-month period, ROC posted a net margin of 4.9 percent this year, compared to 4.0 percent last year.

Gross revenues per passenger cruise day were approximately $145.23 for this year's third quarter, compared to $171.12 last year, while net income per passenger day was $25.82 this year, compared to $36.89 last year.

For the nine-month period, gross revenues per passenger cruise day this year were approximately $152.21 compared to $164.58 last year and net income per passenger day was $7.45 this year compared to $6.52 last year.