UPDATE 1-VW boss warns of "very demanding year" ahead

Thu Apr 19, 2012 5:11am EDT

* CEO cautiously optimistic despite economic uncertainties

* Aims to beat 2011 sales, revenue and match record profit

* Porsche integration still faces "some hurdles" (Adds comments on Porsche, background)

By Andreas Cremer

HAMBURG, April 19 (Reuters) - German car maker Volkswagen is bracing for a "very demanding year" as the European debt crisis weighs on auto markets and global economic growth slows.

"The risks are growing," Chief Executive Officer Martin Winterkorn said in a speech at VW's annual general meeting on Thursday.

Still, Europe's biggest auto manufacturer remains "cautiously optimistic" for 2012 despite the economic uncertainties, he said, adding the company still aims to increase auto sales and revenue beyond 2011 results.

Growing auto markets in Asia, the United States, Latin America and Russia helped VW increase group sales by 15 percent last year to a record 8.36 million cars.

VW, which aims to roll out more than 40 new models or updated vehicles, sold a record 2.2 million units in the first quarter.

Winterkorn restated the company's goal to match last year's record operating profit of 11.3 billion euros ($14.8 billion).

The pursuit of higher earnings this year may be thwarted by costs for a technology overhaul designed to facilitate the construction of as many as 3.5 million small and mid-sized cars.

VW still faces "some hurdles" to combine with Porsche SE's automotive operations, Winterkorn said.

The company would incur a tax burden of about 1 billion euros if it were to use a structure of put/call options to buy the remaining 50.1 percent of Porsche's core business before 2014.

The Wolfsburg, Germany-based manufacturer dropped plans for a full merger with Porsche last September after lawsuits against the sports-car maker in the United States and Germany complicated Porsche's valuation.

"The integrated Volkswagen and Porsche group will happen," the CEO said.

($1 = 0.7621 euros) (Reporting by Andreas Cremer; Editing by Mark Potter)

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