Cruise-line operator Carnival (CCL) saw a sharp decline in its second-quarter profit on Tuesday as it continued to struggle with rising fuel costs and geopolitical events that led to many deployment changes overseas.

The Miami-based vacation company posted net income of $206 million, or 26 cents a share, compared with $252 million, or 32 cents a share, in the same quarter last year, beating the Streets view of 23 cents.

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Revenue for the three months ended May 31 was $3.6 billion, up from $3.3 billion a year ago, ahead of average analyst estimates polled by Thomson Reuters of $3.52 billion.

The companys North American brands revenue yields were up 3% last quarter, while yields for brands in Europe, Australia and Asia increased only slightly, due to the impact of unrest in the Middle East and North Africa, as well as the earthquake and nuclear disaster in Japan, according to Carnival CEO Micky Arison.

Improved revenues were more than offset by higher fuel expenses, which cost the company roughly $150 million last quarter, and lifted total costs 10.3% from the same period last year.

Despite the challenges, the cruise operator said it is continuing with strategic growth initiatives. The company delivered its 100th ship, the 3,690-passenger Carnival Magic, in April, and two other smaller ships in the second quarter.

Looking toward the remainder of the year, Carnival said advance bookings are at higher prices with lower occupancies compared with last year. Second-half booking volumes, however, are already well ahead of the prior year, the company said.

Carnival expects to continue seeing affects from the conflict and disaster in the Middle East and Japan, respectively, and said pricing will remain strong for the remainder of the year.

The company now expects fiscal 2011 earnings in the range of $2.40 to $2.50 a share, narrowly below Wall Street estimates of $2.53 a share.

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