In its last set of results before demerging its cruise division, shipping giant P&O reported a jump in half-year profits despite higher fuel

prices costing it an extra £50 million.

Pre-tax profits for the six months to June 30 were £192.1 million, against £171.7 million.

However turnover was reduced, to £1.99 billion, compared with £3.38 billion at the same point last year.

Chairman Lord Sterling of Plaistow said P&O Ferries had seen "demanding" trading following the loss of duty-free shopping within the European Union and a 75 per cent increase in the price of fuel.

But he said the demerger of its cruises division was progressing on track and was expected to take place on October 23.

Lord Sterling described the demerger, which will see P&O concentrating on logistics and transportation, as "very exciting" and said management of both divisions were "raring to go".

P&O also announced it was taking full control of German cruises group Aida Cruises by buying the remaining 49 per cent stake it did not already own for £35.4 million.

Operating profit in the cruises division rose to £109.3 million, against £99.3 million last time. But the impact of the loss of duty free and higher fuel costs meant P&O Ferries turned in an operating loss of £7.4 million in the period, against a profit of £19.2 million the time before.

But this was offset by better results from P&O's ports division, where operating profits were up to £40.3 million, against £26.9 million and cargo shipping, which turned a loss of £25.5 million into a £13.2 million operating profit.

The group's logistics division also saw operating profits rise to £11.6 million, from £9.7 million.

The reason for the fall in turnover in the period was the loss of a £1.7 billion contribution from selling its Bovis Homes and Bovis Construction groups, Earls Court Olympia and the sale of investment property.