UPDATE 1-Schneider profit drops less than expected

* H1 EBITA 791 mln eur, 903 mln before restructuring

* Average analyst estimate 730.8 mln eur

* H1 net income falls 59 pct

* Keeps 12 pct 2009 margin target, cuts sales outlook

* Shares rise 4.1 pct

(Adds detail)

PARIS, July 31 (Reuters) - French electrical engineer Schneider Electric (SCHN.PA) posted a 42 percent drop in first-half operating profit on weak markets, especially in Europe and North America, and restructuring costs.

Earnings before interest, tax and amortisation (EBITA) fell less than expected to 791 million euros. Before expenses related to restructuring, profit fell 36 percent to 903 million. Sales fell 13 percent to 7.76 billion euros, Schneider said on Friday.

Ten analysts polled by Reuters had expected first-half sales of 7.87 billion euros, on average. Based on five analysts' forecasts, operating profit was seen at 730.8 million.

"We demonstrate our capacity to resist ... an unprecedented decline in sales," Chief Executive Jean-Pascal Tricoire said in a statement. "We will continue to ... manage this still challenging environment by further adapting our cost structure and ramping up industrial productivity."

Schneider said it expects the organic sales trend in the second half to be in line with the 17.9 percent drop in the first, with "early signs of improvement emerging in some new economies". It previously forecast a 15 percent drop.

But the group stuck to its goal for a 12 percent 2009 EBITA margin before restructuring costs.

Shares in Schneider were 4.1 percent higher at 62.69 euros in early trading.

Finance chief Emmanuel Babeau told Reuters in a telephone interview its target for 1.6 billion euros of savings by 2011 still stood and that 300 million was achieved in the first half.

Swiss rival ABB (ABBN.VX) last week posted a 31 percent fall in net profit to $675 million euros and retained a cautious outlook for the rest of the year as customers hesitate about spending on equipment. [ID:nLM295650]

Schneider said last week it had teamed up with Alstom (ALSO.PA) to consider making a joint bid for the transmission and distribution unit Areva CEPFi.PA has put up for sale. [ID:nL0395651] (Reporting by James Regan, Gilles Guillaume and Helen Massy-Beresford)