July 31 (Bloomberg) -- PPR SA gained the most in almost six months in Paris trading after the French owner of Gucci reported first-half profit that beat analysts’ estimates, helped by strengthening luxury sales in Asia.

Earnings before interest, tax, depreciation and amortization slipped 1.8 percent to 925 million euros ($1.3 billion), the company said today. That topped the 791 million- euro average estimate of five analysts compiled by Bloomberg. Net income dropped to 189 million euros from 777 million euros a year earlier, when PPR sold its YSL Beaute cosmetics unit.

PPR shares rose as much as 10 percent, the steepest intraday climb since Feb. 6. Sales of luxury goods advanced 11 percent in China and Hong Kong, and 15 percent in emerging markets, the Paris-based company said. That helped offset declines in North America, Europe and Japan. Profit margins at the Conforama, Fnac and Redcats retailing units were stable.

“Earnings shot past estimates,” Oddo Securities analyst Francois-Regis Breuil said in a note. “In view of these figures, we will raise our estimates and target price.” Breuil has an “add” recommendation on the stock.

PPR was up 6.95 euros, or 9.8 percent, to 78 euros at 11:29 a.m. in the French capital.

First-half revenue fell 3.6 percent to 9.24 billion euros as sales declined at the Conforama furniture chain, Fnac bookshops and the Redcats catalog unit. The decline was partly offset by increased demand for PPR’s luxury-goods brands that include Gucci and Bottega Veneta. Sales of the Gucci brand rose 0.6 percent, excluding currency swings, Chief Financial Officer Jean-Francois Palus said during a conference call today.

Operating Profit

Profit from continuing operations fell 19 percent to 281 million euros ($397 million), PPR said.

Operating profit as a percentage of sales was unchanged at 7.7 percent, the company said. The margin narrowed 1.1 percentage points to 26 percent at the Gucci brand and shrank 0.7 percentage points to 18.6 percent for the luxury-goods unit.

“This is the toughest economic environment in years,” Palus said. “We will do everything to adapt to the market in the second half of this year and in 2010.”

Total revenue in the three months through June 30 fell 4.7 percent to 4.46 billion euros, hurt by a 12 percent decline at Conforama, 8.2 percent fall at Redcats and a 5.5 percent drop at Fnac. CFAO, which distributes cars and pharmaceuticals in Africa, posted an 8.3 percent slide in revenue in the quarter.

Sales at Gucci Group rose 3.7 percent during the three- month period, boosted by a 5.9 percent revenue gain of the Gucci brand and an 8.6 percent rise in sales of Bottega Veneta.

First-half sales at Puma AG, the German sporting-goods company of which PPR owns almost 70 percent, rose 3.8 percent to 1.30 billion euros, the company said today.

To contact the reporter on this story: Ladka Bauerova in Paris at lbauerova@bloomberg.net.

Last Updated: July 31, 2009 05:41 EDT