* 2012 net profit 389 mln euros vs Reuters poll avg 397 mln
* Dividend boost to 1 euro/share for 2013 on E.ON asset swap
* Shares fall 1.8 pct (Adds CEO comments, details on electricity prices, shares)
By Georgina Prodhan
VIENNA, March 6 Austrian energy group Verbund's profits rose less than expected in 2012 as electricity prices fell due to stagnating demand in the recession-hit euro zone and market upheaval in Germany, the continent's biggest market.
European utilities have resorted to selling off assets amid weak demand from manufacturers, key consumers of energy and plunging wholesale prices in Germany, where heavy subsidies for renewables are causing a glut.
Verbund said on Wednesday it would pay a special dividend with cash from the sale of assets in Turkey to E.ON, lifting its shares in early trading.
But by 1142 GMT the shares had turned negative, trading down 1.7 percent at 16.10 euros and underperforming a flat European utilities sector.
"We see stagnating electricity demand," Chief Executive Wolfgang Anzengruber told journalists. "The uncertainty of this environment will remain."
Verbund said net profit rose 9 percent to 389 million euros ($507 million) in 2012, below the average estimate of 397 million euros in a Reuters poll of 10 analysts.
Amid wholesale prices close to eight-year lows in Germany, which accounts for 43 percent of Verbund's production, the company's average selling price fell to 53.6 euros per megawatt hour from 53.8 euros in 2012.
Anzengruber said Verbund was keen to acquire more hydropower assets in Germany, and said the company's gearing of 65 percent, its lowest in years, should give it the flexibility to do so.
"We want to and will build out our position in Germany," Anzengruber said.
Verbund is exiting the high-growth Turkish market with the sale of its business there to Germany's E.ON in exchange for E.ON's interest in eight run-of-river plants in Germany plus other assets.
The company expects a windfall of about 300 million euros in cash from the deal.
Verbund proposed raising its 2012 dividend to 0.60 euros from 0.55 euros, more than had been expected, and said it would raise its 2013 dividend to 1 euro per share provided the deal with E.ON was successfully completed.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 15 percent to 1.2 billion euros in 2012 but the hydropower specialist forecast a 2013 drop to 1 billion euros, saying it could not assume a repeat of 2012's outstanding water supply.
Anzengruber said the company was hedged for 60 percent of its production at just over 50 euros per megawatt hour for the coming 12 months as of Jan. 1, compared with 52 euros a year earlier, and expected to maintain this level throughout 2013.
($1 = 0.7677 euros) (Reporting by Georgina Prodhan; Editing by Michael Shields and Paul Casciato)