By Christiaan Hetzner

FRANKFURT (Reuters) - Volkswagen (VOWG.DE: Quote, Profile, Research), the fourth-biggest carmaker in the world that is soon to be a unit of Porsche (PSHG_p.DE: Quote, Profile, Research), met expectations with its first-quarter results and kept its targets, but profit-taking hit the shares.

A day before what is expected to be a stormy annual meeting, VW said operating profit rose 21 percent to 1.31 billion euros ($2.09 billion), a tick better than a Reuters estimate of 1.3 billion from 18 analysts polled.

Thousands of painful job cuts in Germany under its former management, as well as booming sales in emerging markets, helped Volkswagen post its best year of results in 2007 and has emboldened Chief Executive Martin Winterkorn to set his sights squarely on overtaking industry giant Toyota (7203.T: Quote, Profile, Research).

Aided by VW's powerful chairman and Porsche scion Ferdinand Piech, Winterkorn bought control of Swedish heavy truckmaker Scania (SCVb.ST: Quote, Profile, Research) in March as part of a plan to offer subcompacts and long-haul tractor trailers as well as everything in between.

Even though VW improved margins by nearly 80 basis points to 4.85 percent during the quarter, investors picked up the pace of their selling after the news on Wednesday.

"It's just a bit of profit-taking after the recent strong run in the shares," one analyst said, declining to be named.

By 1136 GMT, the shares had fallen 3.3 percent to 185.01 euros -- still near record levels -- making them the leading decliner among overall weak European carmakers .

UniCredit bond analyst Sven Kreitmair said the VW figures looked to be, on the whole, in line with expectations and showed continued improvement in the group's credit profile.