(Rewrites with CEO quotes, details from AGM)
By Nick Tattersall
STUTTGART, Germany, Jan 24 (Reuters) - Porsche AG, the world's most profitable carmaker, showed on Friday worries about the economy hadn't yet stopped people buying fast cars and said new models would boost its profit again this fiscal year.
Porsche defied the weak economic conditions hitting rivals in the first half of its business year, with pre-tax profit rising 18 percent to 185.1 million euros ($199 million) and sales up almost 20 percent to 2.2 billion euros.
Chief Executive Wendelin Wiedeking reiterated the company was on track to post higher profits and revenues again in the full year, but acknowledged that fears about a war in Iraq, particularly among U.S. consumers, could hurt sales growth.
"We expect to post higher pre-tax profit once again, at least in the case that the threat of war in the Middle East does not disturb business," Wiedeking said at the company's annual shareholder meeting.
"It is undeniable that an important indicator of the state of our business is U.S. sales....And of course the current fear of war is playing a role in our expectations for sales in the United States."
The company nonetheless expects to sell about 65,000 vehicles world-wide in the year ending in July, up from 54,234 the previous year, boosted by the newly-launched Cayenne sports utility vehicle, its first foray away from pure sportscars.
ROBUST 911
Porsche shares rose as much as four percent in morning trade in Frankfurt and by 1307 GMT were up 2.6 percent at 385.81 euros. The stock outperformed a 0.5 percent rise on the DJ European autos index as investors applauded reassuringly robust sales of the classic 911.
"The figures look good, better than I expected," said Sal Oppenheim analyst Michael Raab, who rates the stock strong buy. "Even if you strip out the Cayenne, volumes were almost stable."
Porsche, which has made more money in the past three years than in the previous half century, is banking on the Cayenne as its other sportscars age and has said it may struggle to sell as many of its 911s and Boxsters as it did last fiscal year.
Sales of the 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 is more vulnerable to economic fluctuations."
THREE LEGS
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 any 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.
Analysts at investment bank SSSB, who have an underperform rating on the stock, noted recently that U.S. consumers were increasingly opting for lower-powered, and therefore less profitable, versions of the Cayenne's key rivals, BMW's X5 and Mercedes' M-Class.
But Wiedeking, who has described the Cayenne as the biggest challenge in the company's history, said the time was right to build on Porsche's hitherto recession-resistant strategy of selling just two types of very fast car.
"Sportscars too have a life cycle. That was the idea behind the Cayenne. We didn't want to stand on just two legs, but three," he told shareholders.
Porsche said first-half unit sales rose 5.2 percent to about 24,684 vehicles, according to preliminary figures, while net profit climbed 13.8 percent to 101.7 million euros. 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 gave no further details.
Production in the first half was expected to reach 27,689 vehicles, up 10 percent from this stage last year, including 2,700 Cayennes.