* H1 results beat forecasts
* Net income up 18 pct to 1.48 bln euros
* Opel-Vauxhall turnaround "clearly underway" - CFO (Adds comment from CFO, analysts; details; background)
By Laurence Frost and Gilles Guillaume
PARIS, July 24 (Reuters) - Peugeot maker PSA Group turned its recently acquired Opel-Vauxhall business sharply back into the black while hitting record profitability at its French car brands, soundly beating analyst expectations for first-half earnings.
Net income rose 18 percent to 1.481 billion euros ($1.73 billion) over January-June, as revenues jumped 40 percent to 38.6 billion.
PSA is benefiting from runaway sales of its Peugeot 3008 and 5008 SUVs enhanced by years of cost savings under Chief Executive Carlos Tavares, who pulled the group from near-bankruptcy in 2014 and is applying the same medicine to Opel, acquired from General Motors barely a year ago.
"The turnaround of Opel-Vauxhall is now clearly underway," Chief Financial Officer Jean-Baptiste de Chatillon told reporters on a call.
Cost-cutting at Opel, which had lost a billion dollars a year under General Motors ownership until last year, helped the division record a half-billion euro profit for a 5 percent operating margin. The French brands' profitability topped 8.5 percent, overshooting PSA's 6 percent goal for 2022.
Overall recurring group operating profit rose by almost half to 3.02 billion euros, PSA said, for a 7.8 percent margin.
The results soundly beat analyst expectations of 1.35 billion euros in net income and 2.33 billion in operating profit on revenue of 38.49 billion, based on the median estimates in an Inquiry Financial poll for Reuters.
Opel's better-than-expected performance and return to profit could complicate negotiations with German unions, as PSA seeks to offload engineering departments at the carmaker's Ruesselsheim headquarters near Frankfurt.
PSA, which is already cutting more than 2,000 Opel manufacturing jobs, enraged unions last month by confirming that it was seeking a buyer for research and development activities that currently employ another 4,000 staff.
"We have overcapacity over time at this R&D centre and we have to take care of it," CFO Chatillon said on Tuesday. Talks are ongoing with "partners that could bring in work", he said, declining to identify potential buyers understood to include engineering consultant Altran.
Opel's improvement was helped by purchase accounting that slashed some asset values and resulting depreciation costs. PSA's upbeat earnings will nevertheless draw "repeated double-takes" from investors, said Jefferies analyst Philippe Houchois.
PSA unveiled "impressive numbers all around even if we adjust for abnormally low capital expenditure and depreciation", Houchois wrote in a note.
The group reiterated its full-year global auto market outlooks and said it would update investors on its mid-term goals early next year.
($1 = 0.8560 euros) (Reporting by Laurence Frost and Gilles Guillaume; Editing by Sudip Kar-Gupta)