RPT-UPDATE 1-VW's Skoda Posts Strong Earnings, Sees More Growth

(Adds vehicle sales forecast, quote, details)

MLADA BOLESLAV, Czech Republic (Reuters) - Volkswagen AG's Czech unit Skoda Auto reported a 44 percent rise in yearly net profit on Thursday, driven by strong sales of models such as the recently introduced Roomster compact MPV.

Skoda said it wanted to sell at least 700,000 vehicles this year, up from 630,000 in 2007 thanks to a growth in central and eastern Europe which helped make up for stagnant western European markets.

"We raised unit sales by almost 18 percent in the first two months and March is also looking good," Skoda head of sales and marketing Fred Kappler told a news conference. "Our minimum target for this year is 700,000 units."

Skoda, the biggest company in the Czech Republic by sales and its largest exporter, did not give a financial outlook for this year. But it cautioned that the record high Czech crown and high commodity prices would weigh on its bottom line.

In 2007 the carmaker earned 16.0 billion Czech crowns ($980 million) last year on sales of 222 billion.

Skoda relies on its workhorse models Fabia and Octavia for a bulk of its sales, but has enjoyed rising demand for the Roomster, which it targets at younger drivers.

The Czech carmaker is among the strongest brands within Volkswagen (VOWG.DE: Quote, Profile, Research), which bought it in 1991. The German group aims to sell a total of 8 million cars a year by 2011.

Skoda officials said its German parent was likely to decide later this year to build a smaller Volkswagen model at the Vrchlabi factory in the north of the Czech Republic.

(Reporting by Jan Korselt; Writing by Chris Borowski; Editing by Erica Billingham and David Holmes)