* Reports 20 pct drop in profit
* Shares rise 2 pct
* Proposes dividend of 2.70 Swiss francs (Adds comments from Schindler)
ZURICH, Feb 12 (Reuters) - Swiss group Schindler reported a 20 percent fall in net profits on Friday but a healthy order book at the elevator and escalator maker helped lift its share price.
Net profit last year fell 20 percent to 689 million Swiss francs ($708 million) before minority interests, below analysts' expectations of 702 million francs.
The firm said it was hurt by currency exchange rates and price pressures and at constant currencies sales rose 6.7 percent to 9.4 billion Swiss francs ($9.66 billion).
However, with an order backlog up 8 percent to 9.4 billion francs analysts said the company is well positioned even as markets contract.
The shares were up 2 percent at 154.4 francs by 0928 GMT, having fallen 10 percent this year.
"The high order backlog despite a contracting world market is positive and makes us confident about sales in 2016," analysts from Zuercher Kantonalbank said in a note to investors.
Schindler and Finnish rival Kone are battling headwinds including intense competition on prices and a shrinking overall market that includes a steep contraction in China, which accounts for more than 70 percent of the world elevator market.
Schindler expects to boost revenue this year by 3-7 percent at constant exchange rates, which compares with Kone's forecast for 2-6 percent growth which it gave in late January.
The Swiss firm aims to offset declines by expanding its service business into new Chinese cities and developing new products, including for lower-end building projects which it hopes will replace slumping business in premium high rises.
"Schindler expects to see a slight decline in the global elevator and escalator market in 2016 due primarily to the weakening of the Chinese market," the company said.
"Pricing and currency pressures are expected to persist in many markets."
Schindler reduced the proposed ordinary dividend payout to 2.70 Swiss francs per registered share and participation certificate, down from last year's 3.20 francs but higher than the average of forecasts by analysts of 2.6 francs. ($1 = 0.9728 Swiss francs) ($1 = 0.8837 euros) (Reporting by John Miller; Editing by Susanna Twidale)