FRANKFURT, Germany German automaker Volkswagen AG says net profit fell 50 per cent in the second quarter compared to the previous year, when earnings were boosted by a one-time accounting plus related to its takeover of Porsche.

Excluding the Porsche effect, the companys operating earnings rose 1.8 per cent in what it called a difficult market environment, beating analyst estimates and indicating the company was holding its own in a difficult European auto market. It said it would still achieve its earnings goal for the year.

Net profit fell to €2.85 billion ($3.76 billion) from €5.70 billion in the same quarter a year ago. Revenue rose 8.5 per cent to €52.1 billion.

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Operating earnings, excluding Porsche as well as financial items such as interest and taxes, rose to 3.44 billion euros. That beat analyst estimates for 3.07 billion euros, as compiled by financial information provider FactSet. Profit margin slipped moderately to 6.6 per cent from 7.0 per cent.

The results showed how Volkswagen is continuing to maintain profits despite a tough environment at home in Europe and Germany, wher car sales have been shrinking. It is sustained in part by luxury businesses such as Porsche and its Audi division, wher unit sales are smaller but the company earns much more per vehicle, and by its business in emerging markets such as China.

CEO Martin Winterkorn said Wednesday the company had achieved a solid result in a difficult market environment. The company said that full-year operating earnings, which exclude financial items such as interest and taxes, would at least equal last years.

The company had enjoyed a large boost in the second quarter of 2012 thanks to the recalculation of stock options related to its takeover of high-end sports car maker Porsche, which is now one of VWs 12 brands. The company also makes cars under the Skoda and SEAT nameplates.