Carnival, the world’s largest cruise operator, reported a 2.1 per cent drop in second quarter profits on Friday because of rising fuel costs.

Net income for Carnival dropped by $8m to $380m, or $0.46 per share, from $388m, or $0.47 a share, in the year ago quarter, but beat its forecasts of $0.43-$0.45 a share.

The results also beat average analysts estimates, according to Thomson Financial, of 0.45 a share.

Higher fuel prices reduced earnings by $74m, or 9 cents a share from 2005, contributing to a 4.6 per cent rise in net daily berth costs.

The company has had a turbulent year, and said it had been hit by a drop off in bookings for Caribbean cruises after last year’s record hurricane season.

Howard Frame chief operating officer, said “Before the year started we did not foresee the softness we are currently experiencing in the Caribbean market.”

In March an onboard fire on one of its ships left one passenger dead and also led to cancellations in bookings.

The operator of the the Princess, Holland America and Cunard cruise brands said its profit forecast remained at $2.65-$2.75 a share for the year, following earnings downgrades in March and May.

Revenues grew by 5.8 per cent to $2.66bn, because of an increase in capacity and increased revenue yields, the company said.

Micky Arison, chief executive, said “Our second quarter earnings were largely in line with expectations.”

Its shares rose 35 cents to $38.52 on the New York Stock Exchange.

In response to increasing global competition, Carnival is building 16 ships to add to its 80-strong fleet.

In July, the cruise company will launch a five-day cruise aimed at the Chinese market, departing from Shanghai. Carnival is the first large cruise operator to be granted a license by the Chinese government, and said they had already sold out their first voyage on the ship.

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