Peugeot Citroen, Europe's second biggest carmaker, has bucked gloomy auto industry trends with news of higher profits last year and an upbeat forecast for 2002.

The company on Wednesday reported a net profit for 2001 of 1.7bn euros ($1.5bn), 29% up on the year before.

The French carmaker also delivered an encouraging forecast for 2002, predicting a rise in operating profits despite an uncertain outlook for the wider European car market.

Investors welcomed the news, marking Peugeot's shares nearly 3% higher at 47.12 euros in early trade.

Peugeot confident

Peugeot said in a statement that while it expects the European car market to be "stable or slightly weaker" this year, it remains "confident in its capacity to continue growing in 2002."

The company's share of the European car market rose 1% last year to almost 15%.

Peugeot Citroen's forecast for 2002 contrasts with more cautious predictions from other global car giants.

Many of its American or Japanese counterparts have posted losses for the last year and downgraded predictions for 2002.

Last week, DaimlerChrysler unveiled a dip in 2001 profits and admitted that it is on track to miss its profits forecast this year.

On Wednesday, the European Automobile Manufacturers' Association cast some doubts over the sector's prospects with news that car sales in western Europe fell by 1.3% in January.

Renault falls behind

The group's domestic rival Renault reported a 77% decline in operating profits for 2001 earlier this week, blaming the economic crises in Argentina and Turkey, two of its key foreign markets.

The company's final profits figure was little changed on the year at 1bn euros, buoyed up by a strong performance at Nissan, partly owned by Renault.

Renault Chairman Louis Schweitzer said the company would fast-track the launch of new models in an effort to return to operating profitability by the end of 2002.

But the company refused to comment on whether Renault would make money overall this year.