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* Engie one year into three-year strategy overhaul
* New investments not yet compensating sold assets' profit
* CEO says investors keeping faith in firm's strategy
By Geert De Clercq
PARIS, Dec 7 (Reuters) - French utility Engie is in the contraction phase of its three-year transformation plan when investments in new assets have not yet replaced earnings from assets sold, its chief executive said on Wednesday.
CEO Isabelle Kocher said investors who follow Engie closely understand this and are keeping faith in the firm's strategy.
Engie has realised some 41 percent of a 15 billion euros ($16.12 billion) three-year asset sales programme and plans to invest some 22 billion euros in new activities such as renewable energy production, gas and distributed energy.
"We are one year into a three-year transformation plan and this is the most thankless part," Kocher told reporters.
She said that once old assets are sold, new investments do not always yield returns right away.
"What happens is the immediate loss of revenue. We reinvest organically and that will produce profit contributions in two or three years. We have said this from the beginning," she said.
Engie shares, down 27 percent since the start of the year, are the third-worst performers in the CAC40 French index and the second-worst performers in the Stoxx Europe Utilities index. French media have raised questions about Engie board chairman Gerard Mestrallet's confidence in Kocher, who has succeeded him as CEO.
Kocher declined to comment on Engie's stock market performance, but said the utility's dividend policy had been made clear from the outset and there were no surprises.
"Investors understand well what we are doing... People looking at the company long term see that we are in the contraction phase," she said.
Kocher said Engie would stick with its three-year plan.
"We are ahead of schedule in every way, both in terms of asset sales and in terms of reinvestment," she said.
Kocher said Engie would invest mainly on an organic basis although there may be some acquisitions to complete its technology base, such as the October acquisition of urban three-dimensional modelling specialist Siradel.
Mestrallet confirmed his support last month for Kocher - who was appointed this spring - following media reports that her position was under threat due to Engie's falling stock price and difficulties with putting in place its strategy.
Mestrallet and Kocher have set the former French gas monopoly on a course to focus more on renewables, energy services and regulated activities that are not exposed to commodity prices. Writedowns on its oil and gas business led to an 8.7 billion euros charge in 2015, pushing Engie into a 4.6 billion euro net loss.
$1 = 0.9305 euros Reporting by Geert De Clercq; editing by Susan Thomas