UPDATE 2-Greece's PPC posts record quarterly profit

* Q1 net income up sharply to 219.5 mln euros

* Q1 sales grow 6 pct to 1.5 bln euros

* Sees EBITDA margin improving to 26 pct in 2009

* Shares up 2.3 pct

(Adds quotes, analyst comment, valuation)

By Harry Papachristou

ATHENS, May 19 (Reuters) - Greece's Public Power Corp (PPC) (DEHr.AT) on Tuesday raised the guidance for its underlying 2009 margin after reporting a record quarterly profit due mostly to lower oil prices and more rainfall that helped hydro power.

PPC reported net income of 219.5 million euros ($298 million) versus 30 million a year ago and compared with a mean forecast of 200 million euros in a Reuters poll.

PPC, which uses oil and natural gas for the bulk of its power generation, is recovering from a record net loss of 306 million euros in 2008, when oil and natural gas prices soared.

Falling energy prices allowed the company to cut its fuel bill by 36 percent to 233 million euros in the first quarter. Also, strong rainfall helped boost hydro power generation, which can be operated at low cost.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 130 percent to 472 million euros.

The company said it expected a 2009 EBITDA margin of 26 percent, up from an earlier estimate of 21 percent, assuming that fuel prices and hydro conditions stay at budgeted levels.

"Contrary to 2008, a year with losses resulting from the unprecedented rise in fuel and energy purchase prices and the new CO2 emissions expense, 2009 began with quite positive prospects," Chief Executive Takis Athanasopoulos said in a statement.

Despite the good performance, PPC must become better at containing costs directly under its control to be able to finance a six-year, 13.5 billion euro investment plan for new plants, Athanasopoulos said.

"It is... evident that PPC's profitability is, to a very large extent, exposed to fluctuations of external factors," he said.

PPC's sales grew 6 percent to 1.5 billion euros as a 7 percent increase in electricity prices offset a 1.4 percent drop in power demand.