UPDATE 2-Regus 2010 earnings fall, eyes growth in 2011

* EBIT down 67 pct to 23.8 mln stg (21.99 mln stg consensus)

* Dividend up 8 pct to 2.6 pence

* Eyes revenue growth in 2011

* Shares up 10.7 percent (Adds CEO, analyst comments, shares)

By Neil Maidment

LONDON, March 21 (Reuters) - British workspace rental company Regus (RGU.L) reported a 67 percent drop in earnings after it saw little benefit from any economic upturn, but said expansion and cost-cutting will return it to growth in 2011.

The group, which offers ready-to-use offices for rentals as short as half a day, on Monday said 2010 earnings before interest and tax (EBIT) after growth costs were 23.8 million pounds ($38.7 million), compared with 72.3 million in 2009.

The results, however, were towards the higher end of analysts' expectations, which had ranged between 16 million pounds and 26.40 million pounds, with the consensus 21.99 million, according to a Thomson Reuters I/B/E/S poll.

Shares in Regus, which said it was increasing its full-year dividend by 8 percent to 2.6 pence, were up 10.7 percent in London at 1011 GMT.

Revenues were down to 1.04 billion pounds compared to 1.05 in 2009. Regus Chief Executive Mark Dixon told Reuters it would return to growth in 2011 "whatever happens to the economy".

Analysts at Peel Hunt were slightly less optimistic: "A more upbeat trading statement is encouraging, but we continue to believe that the road to recovery will be bumpy," Andrew Shepherd-Barron wrote in a note, maintaining a "hold" recommendation.

In August, the company said it had swung to a first half pretax loss of 6.1 million pounds for the six months to June 2010 after being hit by restructuring costs in the UK and tough trading conditions across its markets. [ID:nLDE67Q08B]

CORPORATE DRIVE

Regus, which last year invested 70 million pounds in opening 125 new centres and moved into seven new countries, while streamlining the business, said it expected to see a return in 2011.

"What we are seeing is a pretty good start to 2011 but that's really as a result of the investments we made last year and the way we have changed the business," Dixon told Reuters.

Regus, whose clients include Yell (YELL.L), AT&T and most recently U.S. franchised food retailer 7-11, said it was talking to a large number of corporate companies and had strengthened its consulting team to drive up that business.

Dixon added that Regus would push its footprint close to 90 countries this year with openings in Madagascar, Cambodia, Serbia, Croatia and, in the next few weeks, Uganda. ($1=.6158 Pounds) (Reporting by Neil Maidment, Editing by Paul Sandle and Mike Nesbit)