UPDATE 2-GN Store Nord swings to profit but sales disappoint

* Q3 sales down 20 percent, vs forecast 10 percent fall

* Q3 EBITA 45 million Danish crowns, vs forecast 41 million

* Trims 2009 sales forecast, repeats EBITA guidance

* Says hearing aid unit lost market share in Q3

* Shares down 7.9 percent

(Adds detail, quotes, updates share price)

By John Acher

COPENHAGEN, Nov 11 (Reuters) - Danish hearing aid and headset maker GN Store Nord (GN.CO) swung to a third-quarter core profit thanks to cost cutting, but sales shrank more than expected amid fierce competition.

GN Store Nord repeated full-year earnings guidance but lowered its sales guidance, leading its shares down 7.9 percent to 25.50 crowns by 1045 GMT on Wednesday, underperforming a 0.5 percent rise in the Copenhagen bourse blue-chip index .

Its July-September earnings before interest, tax and amortisation (EBITA) came to 45 million Danish crowns ($9.1 million), against a forecast of a 41 million profit in a Reuters poll and after a 27 million loss a year ago.

Sales fell 20 percent, more than the company had expected, to 1.11 billion crowns, below a forecast for 1.25 billion.

Nordea said in a note the sales were disappointing and the numbers suggested GN was losing market share to its biggest rival, Swiss-based Sonova (SOON.VX).

GN Store Nord said it now expected 2009 revenue of around 4.7 billion crowns versus an earlier forecast for around 5 billion. It kept its EBITA forecast steady at 65 million crowns.

TOUGH COMPETITION...

GN, whose hearing aid unit also competes with Danish company William Demant (WDH.CO) and German conglomerate Siemens (SIEGn.DE), said the total U.S. market grew 9 percent thanks to growth in sales to veterans.

On Tuesday, Sonova raised its full-year guidance when beating forecasts with first-half profit that was helped by product launches.

Sydbank analyst Morten Imsgard said competition was fierce. "Sonova is stealing market share from GN and other rivals."

GN investor relations chief Mikkel Danvold said its hearing aid business had lost market share in the third quarter.

Danvold said market shares were closely linked to timing of new products, and noted ReSound's new "Live" and "dot2" products came at the start of the fourth quarter. "So the first effect will come in the fourth quarter, and that is a time lag."

...BUT RESTRUCTURING ON TRACK

GN said restructuring in headset unit GN Netcom and hearing aid unit GN ReSound were well on track and led to EBITA improvements in the quarter versus a year earlier "despite the still challenging market conditions".

GN ReSound has reduced its workforce by about 500 people since the third quarter last year, GN said.

"Net revenues are worse than expected but operating profits hold up fairly well," Imsgard said. "Also, savings programmes are delivering despite weak sales."

"In the third quarter, GN continued to deliver a strong cash flow," GN said. It forecast free cash flow of around 0.5 billion crowns compared with earlier guidance for "significant, positive" cash flow.

GN said it still expected a verdict this year in an arbitration case by its DPTG unit against Polish telecom group TPSA TPSA.WA which is controlled by France Telecom (FTE.PA). (Additional reporting by Anna Ringstrom and Teis Jensen; Editing by Andrew Callus and Dan Lalor) ($1 = 4.966 Danish crowns)