FRANKFURT — Volkswagen AG reported a higher second-quarter profit and stuck to its full-year target of keeping earnings stable despite large investments in new vehicles and intensifying price pressure in Western Europe, where demand for cars has been declining for months.

"Our strong position in the international markets will enable us to outperform the market as a whole—despite the challenging environment," Chief Executive Martin Winterkorn said.

The German auto giant's results highlight the difference between car makers whose reliance on the Western European market is causing them hefty losses and peers with a more diversified global presence, including a big footprint in more dynamic markets such as China, North America or Russia, according to The Wall Street Journal.

Volkswagen's second-quarter net profit rose 20 percent to 5.61 billion ($6.76 billion) and surged 40 percent to €8.77 billion in the first half of the year, boosted by a book gain related to option valuations on Volkswagen's stake in sports car maker Porsche Automobil Holding SE's and higher profit generated from the business.

Operating profit rose 3.4 percent on the year to €3.28 billion in the second quarter, while revenue rose 19 percent to €48.05 billion, driven by a 13.4 percent rise in vehicle sales to 2.39 million units.

In addition to its consolidated operating profit, Volkswagen earned another €1.8 billion through its two Chinese joint-ventures in the first six months, up from €1.2 billion in the same period last year.

Earlier this month, Volkswagen hammered out a deal to take over the remaining 50.1 percent stake in Porsche unit it doesn't already own as of Aug. 1 for €4.46 billion in cash plus one common share.

Porsche, one of the world's most profitable car makers, will join Volkswagen's stable of seven car brands, three commercial vehicle brands and the newly acquired motorbike unit Ducati.

The Audi premium brand retained its position as Volkswagen's largest earnings contributor in the first six months with a 13.2 percent rise in operating profit to €2.88 billion, compared with a 3.8 percent increase to €2.21 billion at its namesake VW passenger car brand.

The Czech Skoda brand contributed €449 million to operating profit, up 9 percent, while the operating loss at VW's troubled Spanish Seat brand narrowed by €6 million to €42 million.

Volkswagen posted record vehicles sales and profit last year, mainly because of its large footprint in emerging markets, superior pricing power in the cutthroat European car market and sales gains in the U.S. But the aggressive expansion, along with its growing industrial complexity, has sparked concerns that the company is becoming increasingly difficult to manage.

But Volkswagen said it "remains confident about the second half of the year" and expects to reach its goals for the year as a whole.

Europe's largest auto maker by sales and the world's No. 2 behind General Motors Co. reiterated it wants to increase revenue and sales volume in 2012.

Operating profit is expected to match last year's €11.3 billion as large-scale investments are anticipated to offset higher sales.

Volkswagen shares initially gained on the earnings numbers, which analysts described as robust and slightly better than expected. But the stock lost some ground later, which traders attributed to profit-taking.