Danish hearing aid and headset maker GN Store Nord reaffirmed its full-year sales and profit guidance on Friday after cost cuts helped it beat forecasts for second-quarter core earnings.

The head of GN's hearing aid unit, which competes with Swiss-based Sonova SOON.S, Denmark's William Demant and German conglomerate Siemens, said he saw a persistently tough market but that GN could gain market share. Earnings before interest, tax and amortisation (EBITA) slid to 2 million Danish crowns ($383,400) in the April-June period from 38 million crowns last year, beating a mean forecast for a loss of 7 million crowns in a Reuters survey of eight analysts.

GN Store Nord kept its 2009 full-year outlook for EBITA of around 65 million crowns and revenue of around 5 billion and said it was focused on creating a leaner company.

I think we have delivered what we promised before 2009 -- that we would make a more lean organisation, bring down costs and deliver a positive cash flow, spokesman Jens Bergholdt told Reuters.

GN shares traded up 3.3 percent at 25.10 crowns by 1225 GMT, outperforming a 0.6 percent rise in the Copenhagen bourse blue-chip index .

Total sales fell to 1.20 billion crowns in the second quarter from 1.36 billion in the year-ago quarter, missing an average forecast of 1.23 billion in the Reuters poll.

We still see a tough market, Mike van der Wallen, chief executive of GN's hearing aid business GN Resound, said in a teleconference.

Customers are trading down, and that is creating a shift in product mix for us, van der Wallen said and added that Resound is well-positioned to take market share in the fourth quarter. He said he still believed that the annual growth rate in the hearing aid industry would return to 7 percent annually as the basic growth drivers -- an aging population and increased exposure to loud sounds -- are the same as before the crisis.

Alm. Brand Markets analyst Michael Jorgensen said that the top line did not indicate a turnaround for the business. But it is positive that they are increasing their cost cutting without having to use more money on this, he said.

GN said that final post-hearing briefs in the vital arbitration case by its DPTG unit against Polish telecom group TPSA, which is controlled by France Telecom, would be submitted on Aug. 28 and the arbitration tribunal was expected to render a verdict before the end of 2009.

DPTG, owned 75-25 by GN and Denmark's TDC, is claiming 840 million euros ($1.20 billion) from TPSA for 15 years of traffic carried over the NSL fibre-optic teleco system in Poland, which DPTG installed.

 ($1=5.217 Danish Crown) ($1=.7008 Euro)

 (Additional reporting by Rasmus Jorgensen; editing by Karen Foster)