UPDATE 1-Water utility Veolia ups dividend and 2019 earnings guidance

(Adds comments on France, Gabon)

PARIS, Feb 21 (Reuters) - French water and waste group Veolia said strong waste volumes and continued cost-cutting boost 2018 earnings and the firm increased its dividend and 2019 earnings outlook.

Veolia chief executive Antoine Frerot said on a call with reporters that the business outlook remains favourable and that 2019 “should be another year of sustained growth”.

Frerot said that thanks to strong waste revenue growth, favourable water tariff indexation and new water contracts, Veolia’s key French business had seen revenue grow 1.6 percent to 5.5 billion euros, the first significant revenue growth in four to five years.

He added the French business should do well again this year.

Veolia’s 2018 revenue was up 4.4 percent to 25.91 billion euros ($29.35 billion), its core earnings before interest, tax, depreciation and amortisation (EBITDA) were up 5.4 percent to 3.39 billion euros and net profit was up 10.5 percent to 439 million euros.

The firm also proposes to increase its dividend by 10 percent to 92 cents per share from 84 cents.

An Infront Data poll had forecast revenue of 25.68 billion euros, EBITDA of 3.39 billion, net profit of 629 million euros and a dividend of 90 cents per share.

For 2019, Veolia boosted its core earnings guidance by three to six percent to 3.5-3.6 billion at constant foreign exchange rates (based on end 2018 rates). In November, the firm had forecast 2019 core earnings of 3.3 to 3.7 billion (based on end 2016 exchange rates).

Analysts are expecting 2019 core earnings of 3.5 billion euros, a ThomsonReuters consensus forecast shows.

Frerot said that a few days ago, Veolia had come to an agreement with the government of Gabon, against which it had started arbitrage court proceedings after the country had terminated it water contract and seized assets early last year.

He said Gabon had agreed to buy Veolia’s 51 percent stake in its local unit, Société d’Energie et d’Eau du Gabon (SEEG), for 45 million euros and that Veolia would withdraw its arbitrage case when the agreement was finalised. ($1 = 0.8828 euros) (Reporting by Geert De Clercq Editing by Mathieu Rosemain and Bate Felix)