FRENCH auto maker PSA Peugeot-Citroen today said net profit rose almost 50 percent in the first half as cost-cutting and efficiency measures more than offset an increase in energy and raw material costs.

Net profit in the six months until June was €33 million (US$1.16 billion), an increase of 49 percent from €92 million in the same period a year earlier, the car maker said.

Revenue climbed 1.6 percent to €1.3 billion.

Peugeot-Citroen said it is maintaining its full-year objective of a 5 percent growth in sales volumes to between 3.55 million and 3.65 million vehicles, even as it anticipates a 4 percent decline in its home European market this year after a difficult second half.

Peugeot-Citroen CEO Christian Streiff has set a target of 4 million vehicle sales by 2010, with the bulk of the growth coming from outside the mature European market.

In Europe, would-be car buyers are being dissuaded by record-high gas prices and a slowing economy.

But Europe's second-largest car manufacturer by sales is upbeat about its sales potential, pointing to a barrage of new products launched or being launched this year, including the Peugeot 308, a small family car, and the larger Citroen C5.

Peugeot-Citroen said it is well positioned, thanks to a large range of energy-efficient and low-emissions vehicles.

The Paris-based car maker also is keeping its full-year target of a 3.5 percent operating margin in 2008. In the first half, operating profit -- a measure of earnings from ongoing operations -- rose 32 percent to €1.12 billion, or 3.6 percent of sales.