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Porsche Net Profits Up in First Half

Luxury sports car maker Porsche confirmed Monday that net profit soared in the fiscal first half of 2007, boosted primarily by a gain from its stake in Volkswagen.

Net profit rose to 1.14 billion euros ($1.5 billion) in the half ending Jan. 31, higher than the 1.05 billion euros ($1.38 billion) preliminary figure reported in January at the company's annual general meeting, compared to 170 million euros in the same period a year earlier.

Porsche's 27.3% Volkswagen stake contributed a more than a 1 billion euros ($1.32 billion) gain while the revaluation of Volkswagen shares held by Porsche yielded another 520 million euros ($684.48 million), the company said.

"Since the start of our investment in Europe's biggest automotive group around a year and a half ago, Porsche's share price has risen by 50% and Volkswagen's share price has doubled," the company said in a statement. "Any initial doubtful voices in relation to our shareholding in VW have long since faded."

Sales fell to 3.07 billion euros ($4.04 billion) from 3.11 billion euros slightly better figures than initially reported as Porsche sold 39,265 cars, down from 42,230 in the same period a year earlier.

Porsche attributed the overall 7% drop in unit sales to the model change for the Cayenne SUV. Production of the first generation Cayenne was discontinued in November 2006 with sales of the new model not commencing in Europe and Asia until late February. On the other hand, sales growth of the mainstay 911 and Boxster series were up 15.7% and 19.6% respectively.

Earnings before taxes rose to 1.59 billion euros ($2.09 billion) after a figure of 278 million euros in the prior-year period and Porsche reiterated its expectation of surpassing 2006's pretax profit of 2.1 billion euros ($2.76 billion) in fiscal 2007.

"Porsche is more optimistic for the 2006-2007 fiscal year as a whole than it was at the beginning of the fiscal year." the company said. "Even the difficult market environment in the USA does not overshadow this optimism. Porsche aims to match the high prior-year level of unit sales and sales revenue with the growth markets in eastern Europe and Asia contributing substantially to sales."

It said, for example, that it was increasing the number of dealers in China from 12 to 20 and was "confident that it can double unit sales in China this year by comparison with the previous year, during which roughly 1,920 vehicles were sold."

No quarterly figures were released.

Porsche shares were down 3.3% in midday trading in Frankfurt at 936 euros ($1,232.06) amid a general drop in the market.