UPDATE 2-Geberit beats forecasts but gloomy on construction

* H1 profit falls 21 pct to 203 mln Sfr

* Beats average estimate of 188 mln Sfr in Reuters poll

* Sees operating results at upper range of mid-term targets.

* Shares up over 3 pct, outperforms Swiss mid-cap index

(Adds analyst comment, shares)

ZURICH, Aug 11 (Reuters) - Swiss sanitary equipment maker Geberit AG (GEBN.VX) gave a gloomy outlook for the building industry on Tuesday after posting a 21 percent fall in first-half net profit that still beat forecasts.

Net profit slumped to 203 million Swiss francs ($187.6 million) as the bottom line was hit by a stronger Swiss franc, but this was still ahead of the average forecast of 188 million in a Reuters poll and boosted its shares.

By 0915 GMT, shares in Geberit had risen over 4 percent to 157.10 francs, outperforming a slight rise in the Swiss mid-cap index .SMIM, thanks to the group's strong profitability.

"Geberit has shown considerable sales growth skills in the past and management has now proven high cost-cutting skills as well," said Vontobel analyst Serge Rotzer.

Geberit said it expects operating results to be in the upper range of its medium-term target for an earnings before interest, tax, depreciation and amortisation (EBITDA) margin of between 23 percent and 25 percent in 2009.

The group, which is best known for its toilet flushing systems, posted a 15 percent drop in sales to 1.1 billion, while its EBITDA margin was near stable at 28 percent compared to 28.2 percent in the year-ago period.

However, Geberit said it expects the decline in the building industry to continue.

"Construction volumes are regressing further in most of the geographical markets that are important to Geberit; no recovery can be realistically expected before 2011," the group said.

Chief Executive Albert Baehny said on a conference call, however, the German market, one of the group's most important, should not deteriorate further in the second half, while the renovation market was also holding up in Europe. ($1=1.082 Swiss Franc) (Reporting by Katie Reid and Silke Koltrowitz; editing by Simon Jessop)