Aug. 15 (Bloomberg) -- AWD Holding AG, a German financial services broker, said second-quarter profit fell 8.3 percent as it spent money on marketing financial products to offset slowing life insurance sales.

Net income fell to 11 million euros ($14 million) from 12 million euros a year earlier, the Hanover-based company said in an e-mailed statement today. Analysts forecast a profit of 11.3 million euros, the median of eight estimates in a Bloomberg News survey showed.

AWD aims to increase sales of financial-planning and pension products after a cut in tax subsidies hurt demand for traditional life insurance policies in Germany. The company had 32.3 million euros in marketing and sales costs in the quarter, about a third more than a year ago, tied to advertising during the World Cup soccer tournament in Germany in June and July.

``Selling expenses and administrative costs were more than expected as they tried to tell the market about the need for old- age provisioning,'' said Andre Huesemann, an analyst at SRC Research. He kept his ``buy'' rating on the stock, noting that sales developments have been less ``chaotic'' than at rival MLP.

AWD expects to meet an earlier forecast for ``double-digit'' sales growth and ``clearly'' faster operating profit growth, Chief Executive Officer Carsten Maschmeyer said at a press conference today.

MLP last week cut its 2006 profit forecast by 25 percent and replaced the management board member in charge of sales as it struggled to sell more pension products.

Sales Rise

AWD shares slipped 31 cents, or 1.1 percent, to 26.96 euros by 4:12 p.m. in Frankfurt. The stock has advanced 15 percent this year, valuing the company at 1.04 billion euros.

Sales in the quarter increased 17 percent to 174.1 million euros in the quarter, while operating profit, defined as earnings before interest and taxes, rose 1.8 percent to 16.9 million euros, the broker said.

Life insurance sales accounted for 18 percent of revenue, down from 23 percent a year ago. The share of fund-linked products rose to 37 percent from 32 percent, and revenue from selling mutual funds rose to 23 percent of sales from 12 percent, AWD said.

Full-year sales will exceed 700 million euros, Maschmeyer said in an interview, adding he has no plan to cut the share of profit paid out in dividends for 2006.

AWD has ``shown strong operating performance in the second- quarter,'' while becoming less dependent on waning life insurance sales, said Ralf Kugelstadt, an analyst at UBS AG in Frankfurt, in a note to clients. He recommends investors ``buy'' the stock.

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To contact the reporter on this story:
Oliver Suess in Munich at  osuess@bloomberg.net

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