February 7, 2018 / 5:43 PM / in a year

UPDATE 1-France's Vinci optimistic on 2018 prospects

* 2017 profits, sales beat forecasts

* Vinci eyes further earnings, revenue growth in 2018

* Expects all business lines to achieve revenue growth (Adds details from statement)

By Dominique Vidalon

PARIS, Feb 7 (Reuters) - Vinci on Wednesday predicted a further rise in profits and revenue this year thanks to an improving domestic construction market and a robust concessions business.

Europe’s biggest construction and concessions group made the forecast after it said net income rose 15.2 percent to 2.74 billion euros ($3.36 billion) in 2017, as revenues rose 5.7 percent to 40.25 billion euros, beating expectations.

Operating income rose 10.4 percent to 4.61 billion euros, also helped by cost control.

The results were above analyst expectations for 2.66 billion euros in net income, operating income of 4.53 billion and 40.13 billion in revenue, based on the median of estimates in an Inquiry Financial poll for Reuters.

Vinci said its proposed dividend would rise to 2.45 euros per share from the 2.10 euros paid out in 2016.

“With our solid financial position, growing order books and promising environment in France and other major markets, Vinci can look forward to 2018 with optimism,” Vinci CEO Xavier Huillard said in a statement.

“In 2018, Vinci expects further growth in consolidated revenue as well as in overall operating income and net income,”

The company said its construction business, the biggest contributor to group revenue, saw a 2 percent rise in revenue last year while concessions revenue rose 10.3 percent.

To counter construction sector weakness Vinci has been expanding into faster-growing and more profitable concessions such as airports and motorways as well as in energy engineering.

Vinci, which operates about half of France’s motorway concessions said motorway traffic grew 1.7 percent in 2017 while passenger numbers across all airports managed by the group rose 12.4 percent to 148.9 million.

Last month, the French government abandoned plans for a new 580 million euro airport near Nantes in western France and said it would compensate Vinci for the loss of the contract but wanted the cost to be as low as possible for the taxpayer. Independent experts have said Vinci could stand to receive up to 350 million euros.

Vinci shares have lost 2.81 percent so far this year, having gained 31 percent last year. Vinci shares trade at 17.7 times estimated 2018 earnings compared to 17.4 times for Eiffage .

$1 = 0.8144 euros Reporting by Dominique Vidalon. Editing by Sudip Kar-Gupta and Jane Merriman

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