Volkswagen‘s luxury unit Audi reportedly reaffirmed its guidance for flat 2004 earnings on Tuesday despite a 9.5% rise in first-half operating profit thanks to record vehicle sales.

According to Reuters, the Ingolstadt-based carmaker, whose first-half operating profit reached €586 million ($US707 million), said overall weak car markets and tough competition were keeping it cautious.

Net profit reportedly climbed by more than 16% to €336 million on a 7.7% rise in revenues to 12.3 billion.

“We’re aiming for a strong overall earnings result,” Audi AG chief executive Martin Winterkorn said in a statement cited by the news agency.

A spokesman told Reuters this meant operating profits should remain flat at last year’s level of €1.06 billion. Revenues should exceed the €23.4 billion generated in 2003.

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“The second half still has a long way to go. Since car markets are weak and the competition is harsh, we want to remain cautious with our guidance,” he reportedly said.

The same outlook was given last week, when Winterkorn said he expected flat 2004 profits despite a rise in revenues, Reuters noted.

Thanks to the launch of the new Audi A6 full-sized saloon and the A3 Sportback [a five-door version of the A3 launched earlier], the company reaffirmed its target of record Audi brand car sales this year despite the soft car markets and tough competition, the report said.

Reuters noted that Audi recently said first-half deliveries to customers rose 0.6% to 389,970 cars on the back of improved sales of its A8 luxury limousine.