Ford Motor Co's Romanian plant saw profits drop by more than 26 per cent in the first half of 2008 on weaker sales, news reports said Tuesday.

Net income at the Craiova plant, which is being upgraded to start vehicle production next year, fell to 1.08 million lei (454,000 dollars), the Mediafax news agency said. Sales fell by 4 per cent, the report said.

Ford last year agreed to pay Romania's government 57 million euros (79 million dollars) for a 72-per-cent stake in the plant, which was originally taken over by South Korean automaker Daewoo in the 1990s.

The move confirmed Romania as a rising auto industry hub after Renault's Dacia unit racked up strong sales with budget-priced cars.

Ford formally took over Craiova in March after settling an aid dispute with the European Union and has pledged investment of 675 million euros (930 million dollars) in the plant.

Under a deal with the European Commission, the EU's executive arm, Romania's government is to provide about one-fifth of the investment.

Earlier, the Commission ordered Ford to return 27 million euros in illegal state aid to the Romanian government.

Starting mid-2009, Ford plans to ramp up annual production at Craiova to 300,000 vehicles and 300,000 engines. Employment at the plant is slated to rise from 3,900 to
7,000.

Craiova currently makes mostly automotive parts.