* Shares down 8 pct
* Does not see a recovery in French construction market
* But sees rise in net income, to pay special dividend
* Concessions perform well, traffic seen rising (Adds CEO comments, share drop, broker comments)
By Gilles Guillaume and Natalie Huet
PARIS, Aug 1 Europe's biggest construction and concessions company, Vinci, warned it expected business to slow down this year because of falling orders in its home market France, sending its shares down more than 8 percent on Friday.
Vinci, which had previously forecast roughly stable full-year revenue, now expects a slight decrease on a like-for-like basis, as it sees projects outside Europe temporarily drying up and prospects in France remain glum.
Reporting first-half results late on Thursday, it announced an exceptional dividend and said it expected a strong increase in consolidated net income in the full year thanks to asset sales including parking business VINCI Park.
Like other builders, Vinci has seen construction slow down since the 2008 financial crisis and has expanded into higher-growth, more profitable concessions such as airports and motorways.
In France, which accounts for 60 percent of Vinci's revenue, the company said public sector orders had further dropped in the second quarter because of municipal elections, while the residential building market was not recovering as expected.
Vinci said a possible slowdown in the second half of the year would be primarily due to a lag between the completion of old large projects and the start of new ones outside Europe.
Analysts said they were caught off guard by a one-third decline in operating income from construction because of delays in Vinci's tramway project in Nottingham in the UK, and by the gloomy outlook in France.
Broker Bryan Garnier lowered its rating on the stock to "neutral" from "buy", saying the group's fundamentals remained positive in the long run but there was weak visibility regarding the short-term outlook.
Societe Generale said it was disappointed by the results but stuck with its "buy" recommendation on Vinci, saying the concessions portfolio had achieved "excellent results" and gave the company "solid upside potential".
Vinci stock fell as much as 11 percent in Friday morning trade and was down around 8.5 percent at 1108 GMT. The drop, the worst intraday loss in four years, wiped some 2 billion euros ($2.7 billion) off Vinci's market capitalisation and erased the stock's gains this year.
Order intake at Vinci's main contracting business, which includes construction and road building, fell 3.9 percent in the first half. The group's order book stood at 29.6 billion euros, down 3.3 percent from a year earlier.
Vinci's concessions business, which includes motorways, stadiums and airports, saw first-half operating profit rise 13 percent. Vinci expects traffic this year to grow at least 5 percent at its airports and around 2 percent on its toll roads.
Chief Executive Xavier Huillard wants Vinci to become a key player in airport concessions after it spent 3.1 billion euros on Portuguese airport operator ANA last year and raised its stake in French airport group ADP to 8 percent.
Huillard told a news conference on Friday that he did not rule out bidding for France's southern airport of Toulouse, of which the government plans to sell up just under 50 percent and in which ADP is also interested.
Huillard also said the company was open to the idea of selling stakes in its concessions, such as motorways, to raise cash for expansion overseas, as it did with Vinci Park. He restated Vinci's interest in Latin America, particularly Colombia and Peru.
Vinci said last month it was bidding to buy Slovenian airport operator Aerodrom Ljubljana.
Vinci's first-half net profit was 1.323 billion euros ($1.77 billion), up from 748 million a year earlier, partly reflecting asset sales.
Vinci said it would pay an interim dividend of 1 euro per share, including 45 cents payable as a special dividend, returning surplus capital to shareholders. It also plans to cancel some 23 million shares, or 3.77 percent of its capital. (1 US dollar = 0.7471 euro) (Writing by Alexandria Sage and Natalie Huet; editing by Shadia Nasralla and Tom Pfeiffer)