* Q3 orders 3 pct to 5.1 bln euros
* Sees strong orders in Q4
* Confirms three-year targets (Adds detail, analyst comment, share price)
By Elena Berton
PARIS, Jan 22 (Reuters) - French engineer Alstom said a recovery in sales was building as government contracts for commuter trains in Europe and demand for power plants in emerging markets lifted orders despite a faltering global economy.
The group, which makes commuter and high-speed trains, wind turbines and turbines for power stations, said on Tuesday orders rose 3 percent in the third quarter of its financial year and sounded upbeat about the months ahead.
“We expect order intake to be strong in the fourth quarter with sales continuing their recovery,” Chief Executive Patrick Kron said.
After suffering a slowdown in orders three years ago when Europe’s economy stalled, Alstom has increased its focus on emerging markets, where demand for energy is rising, and branched into new businesses such as offshore wind turbines, which are benefiting from growing demand for renewable energy.
The group, which competes against Germany’s Siemens , has forecast annual sales growth of over 5 percent this year and in the next two, as well as a gradual improvement in its operating margin to around 8 percent by March 2015.
It confirmed its three-year financial targets on Tuesday and also said it expected positive free cash flow for the second half of its financial year through March.
Alstom’s book-to-bill ratio, a measure of new orders against actual shipments, was above 1 for the ninth consecutive quarter, indicating a market that is continuing to expand.
“The positive book-to-bill for a ninth consecutive quarter is good news, as is the share of emerging market orders at 48 percent,” said Espirito Santo analyst Rob Virdee.
Alstom shares, which have risen around 13 percent in the last year, were down 1 percent at 31.565 euros by 0940 GMT, broadly in line with France’s benchmark CAC 40 index.
A German newspaper reported on Tuesday that Siemens, due to publish first-quarter earnings on Wednesday, post results ahead of expectations.
Alstom said its orders totalled 5.1 billion euros ($6.8 billion) in the third quarter, in line with the average estimate of 5.03 billion from a Reuters poll of seven analysts.
Despite the recession across much of Europe, train operators there placed orders to refurbish ageing commuter fleets.
These included a 440 million-euro contract to supply 70 regional trains to Italy’s state-owned railway operator and a 100-million-euro order for 20 commuter trains from German public transport authority ZGB.
Alstom’s power unit, meanwhile, secured gas turbine contracts in Jordan, China and Libya, as well as two orders for hydroelectric plants in Colombia and Ethiopia. However, it failed to secure large deals, as in previous quarters.
Third-quarter sales rose 1 percent to 4.9 billion euros. In the first nine months of the year they reached 14.7 billion euros, up 3 percent on the same period a year earlier.
$1 = 0.7510 euros Reporting by Elena Berton; Editing by Lionel Laurent and Mark Potter