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UPDATE 2-American Axle profit up on light truck sales

(Recasts first sentence, adds company outlook, CFO, analyst comments, byline, updates share price. Previous dateline DETROIT)

By Susan Kelly

CHICAGO, July 24 (Reuters) - American Axle & Manufacturing Holdings Inc. on Wednesday reported a 43 percent profit increase on strong sales of light truck parts to top customer General Motors Corp. and raised its 2002 earnings goal.

The parts supplier said improved productivity and a focus on cutting costs also bolstered earnings in the second quarter. It raised its 2002 profit target by 15 cents a share to $3, citing the stronger quarter and a slightly more optimistic forecast for North American vehicle production this year.

Analysts polled by Thomson First Call were already expecting the company to earn $3.03 a share on average in 2002, within a range of $2.87 to $3.20.

The company said it now expects light vehicle production of 16.1 million, up from its prior forecast of 16 million.

"Given what has happened in this country in the last year, consumer sentiment has been pretty resilient," Robin Adams, American Axle's chief financial officer, told Reuters.

"Sales, although not gangbusters, are relatively level, indicating good continued demand from consumers but no expectation of a significant increase in demand," he said.

Detroit-based American Axle, which makes axles and steering and suspension systems, said its second-quarter net income rose to $48.6 million, or 92 cents a share, from $34 million, or 72 cents a share, in the same period a year earlier.

Analysts had expected 89 cents a share on average, within a range of 83 to 95 cents.

Shares of American Axle, rose 88 cents, or 4.1 percent, to $22.18 in midday trading Wednesday on the New York Stock Exchange, bouncing back from Tuesday's close of $21.30, which was near a six-month low.

"The company remains well positioned to benefit from strength in GM trucks," Robert W. Baird & Co. analyst David Leiker said in a research report on Wednesday.

Sales rose 9 percent in the latest quarter from a year before, to $881.3 million, fueled by GM's increased light truck production, American Axle said.

Sales to GM, the world's largest automaker, comprised about 89 percent of the company's total revenue for the quarter.

But American Axle looks to double its business with automakers other than GM as a percentage of its total revenue over the next 18 months, based on orders already in hand, Adams said.

American Axle said it will supply front and rear drive systems for the new heavy-duty Dodge Ram pickups being launched this year by Chrysler Group of DaimlerChrysler AG .

"For a long-term-perspective target, we'd like to get our non-GM business up to 50 percent, but it's going to take us a while to get there," Adams said.

GM's higher production offset a product mix shift at the automaker to more mid-size sport utility vehicles that reduced American Axle's average content per light truck by 2 percent from last year's second quarter to $1,100 per vehicle.