MAN AG, Europe's third-largest truck maker, said yesterday second-quarter profit rose 1.3 percent on stronger demand for diesel engines and turbines, while orders for trucks slowed.

Net income rose to 446 million euros (US$694 million), or 3.01 euros a share, from 440 million euros, or 2.98 euros, a year earlier, the Munich-based company said yesterday. Profit beat the 414-million-euro median estimate of six analysts surveyed by Bloomberg News. 'MAN is setting itself apart from the competition,' helped by its strong position in heavy-duty trucks, said Frank Biller, an analyst with Landesbank Baden-Wuerttemberg. 'The numbers are significantly better than expected.'

MAN and other European truck makers have relied on eastern Europe to sustain growth, as orders slow closer to home. MAN opened a 100-million-euro plant near Krakow, Poland, in October 2007. Swedish rivals Scania AB and Volvo AB are adding production in Russia, where MAN opened an office in April and plans to expand its service stations. Soaring oil prices and tight credit markets have begun to squeeze demand across Europe.

Momentum in central and eastern Europe has slowed, while growth in Russia remains 'dynamic,' the company said.

MAN fell as much as 80 cents, or 1.2 percent, to 65 euros in German trading, and was down 0.3 percent at 12:27pm yesterday in Frankfurt, valuing the company at 9.8 billion euros. The shares have fallen 42 percent this year.

Sales rose 23 percent to 4.26 billion euros. MAN forecast 'a good 10 percent' growth in revenue in 2008 and a return on sales of just under 12 percent, reiterating an April forecast.

New orders, an indicator of future sales, rose 8 percent to 5.12 billion euros in the second quarter.