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UPDATE 2-Porsche defies gloom with strong H1

(Changes dateline from FRANKFURT, adds analyst, share price)

By Nick Tattersall

STUTTGART, Germany, Jan 24 (Reuters) - German sportscar maker Porsche AG posted on Friday a sharp rise in earnings in the first half of its fiscal year as the world's most profitable carmaker again defied weak economic conditions hitting rivals.

Porsche said its pre-tax profit in the six months to January 31 rose 18 percent to 185.1 million euros ($199 million) while revenues were up almost 20 percent to about 2.2 billion euros.

Porsche also said in a statement ahead of its annual shareholder meeting later on Friday that first-half unit sales were up 5.2 percent to about 24,684 vehicles, according to preliminary figures.

The company reiterated it was on track for a ninth consecutive year of record profit and said it would sell about 65,000 vehicles in the year ending in July, up from 54,234 vehicles in the previous year.

Porsche shares rose 3.7 percent to 390.00 euros by 0835 GMT, outperforming a 0.35 percent gain on the DJ European autos index .

"At first glance the figures look good, better than I expected," said Sal Oppenheim analyst Michael Raab, who rates the stock a strong buy. "Even if you strip out the Cayenne, volumes were almost stable."

Porsche is banking on its new Cayenne sports utility vehicle (SUV) to lift overall sales and profit and has said it may struggle to sell as many of its 911 and Boxster sportscars in its current fiscal year as it did last time round.

Sales of the classic high-margin 911 rose about 4.3 percent to 13,697 vehicles in the first half, a better showing than many analysts had expected, while sales of the entry-level Boxster fell 8.4 percent. It sold 1,510 Cayennes.

"The average 911 customer's share portfolio may have halved over the past year, but he doesn't seem to care," Raab said. "It is the Boxster clientele that are more vulnerable to economic fluctuations."

Porsche tends to sell more cars and book most of its profit in its fiscal second half, and investors are hoping the launch later in the year of 911 derivatives including a range-topping GT3 will cushion weakness in its sportscar sales.

But some analysts are concerned that expectations for the Cayenne may be riding too high, pointing out a potential shift to smaller-engined SUVs in the United States and a growing trend towards diesel in the luxury off-roader market in Europe.

"Porsche is likely to find it difficult to top last year's operational and financial performance," investment bank SSSB, which has an underperform rating on the stock, said in a recent research note.

Porsche's pre-tax profit jumped 40 percent to 828 million euros in its last business year.

The company said its net profit in the first half had risen 13.8 percent to 101.7 million euros, according to preliminary figures. Revenues adjusted to exclude the financial services division rose just over 10 percent to 2.03 billion euros.

A Porsche spokesman said the company had booked a gain in the first half in revenues and profits from its engineering work on Volkswagen's recently launched Touareg SUV. But he did not specify a figure for the gain.

Production in the first half was expected to reach 27,689 vehicles, up 10 percent from this stage last year, including 2,700 Cayennes.