RPT-WRAPUP 1-Engineering groups struggle to see recovery

(Repeats to widen distribution)

* ABB, Alstom vow to keep costs down

* ABB Q3 net profit rises to $1 bln, in line with guidance

* Alstom H1 op profit 828 mln euros vs forecast 809 mln

* ABB shares fall 4 pct, Alstom little changed

By Katie Reid

ZURICH, Oct 29 (Reuters) - European engineering groups ABB (ABBN.VX) and Alstom (ALSO.PA) warned on Thursday it was hard to predict when there will be a sustainable revival of demand and vowed to keep costs under control to counter the downturn.

The sector has been grappling with tough markets as clients have struggled to get financing for new projects and both groups are banking on emerging market growth and a drive for more clean energy to boost demand in the medium term.

ABB Chief Executive Joe Hogan told reporters the Swiss group had yet to see any signs of stabilisation, but that he expected to see a gradual upturn in the course of 2010.

"It remains unclear when and how quickly capital investments by customers will recover from the downturn," the company added.

ABB posted a 21 percent slump in third-quarter orders as its industrial customers remained wary about splashing out on new equipment. [ID:nLT488813] France's Alstom said first-half orders tumbled 54 percent as power generation clients delayed their investments, but confirmed its operating margin target and said orders may tick up in the second half of its financial year, which runs to the end of March. [ID:nLT162116]

By 0944 GMT, shares in Alstom were up 0.2 percent at 46.91 euros, while ABB had tumbled more than 4 percent to 19.58 Swiss francs as investors were disappointed with the weaker-than-expected order intake.

The DJ Stoxx European industrial goods and services index was trading near flat .SXNP.

"Overall, both the downturn and the restructuring programme continue to mature, and ABB will be particularly well positioned once demand improves," said Alessandro Migliorini, analyst at Swiss brokerage Helvea.

COST CONTROL

ABB is looking to cut costs by $2 billion by the end of 2010 to offset the impact of crumbling demand in the industrial, construction and automotive markets and CEO Hogan said the company would cut jobs in all its units apart from power systems, which is more robust.

The group sells power equipment to utilities as well as oil and gas companies and has already cut more than $1 billion in the first three quarters of 2009, putting it ahead of schedule.

Alstom also said it was looking to reduce costs and had cut 2,000 jobs during the first half.

"Any prediction of the future level of order intake is by nature difficult," it said.

Both groups are expected to benefit from government stimulus packages designed to counter the slowdown and are hoping that emerging markets will drive future growth as China and India ramp up investment in power infrastructure.

ABB's conservative stance contrasts with rival Schneider Electric SA (SCHN.PA), which earlier this month raised its full-year margin forecast citing an improving economic environment. [ID:nLM422744]

The Swiss company, which also competes with Germany's Siemens AG (SIEGn.DE) and France's Areva SA CEPFi.PA in electricity transmission and distribution equipment, trades at nearly 20 times forecast 2010 earnings, at a premium to both Schneider and Alstom. (Additional reporting by Lionel Laurent in Paris and Sam Cage in Zurich; Editing by David Holmes and Erica Billingham)