P&O has reported operating profits of 110.7 million pounds for P&O Cruises for 1995 compared to 100.1 million pounds for 1994.

P&O Cruises includes three ships operating mainly in Europe in addition to the Princess Cruises nine-ship North American fleet.

According to Lord Sterling, Chairman of P&O, the company would have posted a 20 million pound plus operating profit if it had not been for a 12 million pound exceptional cost resulting from the Star Princess being grounded while under pilotage.

"The diversiry and strength of our U.S. business meant that the slight weakness reported by some operators in the Caribbean did not noticeably affect us," Lord Sterling said, adding that the two newbuilds, the Oriana and the Sun Princess, have had excelent customer acceptance.

According to Lord Sterling, 1996 has started well with strong bookings and yields. "We remain confident about future growth potential," Lord Sterling said. "Cruising still only accounts for a very small percentage of total leisure spending.

"The entry of new operators like Airtours in the U.K. and Disney in the United States will help to widen and develop the cruise market. We will further benefit from the changing demographics and the steady increase in disposable income," he added.

Lord Sterling also noted how the "big three" cruise companies have distanced themselves from the smaller, less profitable operators and can be expected to move further ahead. "We have two more ships on order, for delivery in 1997 and 1998, and intend to order a further ship in the same class as the Sun Princess for delivery thereafter.

"The new ships, which are extremely cost effective, will replace old tonnage and further improve our margins," Lord Sterling added.

P&O posted operating profits of 490.8 million pounds on revenues of 6.5 billion pounds in 1995, compared to operating profits of 477.3 million pounds on revenues of 5.9 billion pounds in 1994.

P&O also includes other ferry and cargo shipping operations as well as real estate and construction companies.