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Alstom, refocused on rail, eyes higher sales and margin

* Meeting on Dec. 19 to give shareholders say on GE deal

* Alstom will detail use of cash ahead of meeting

* H1 transport sales rose 13 pct to 3.1 bln eur

* Op margin improved in transport to 5 pct (Adds detail, background)

PARIS, Nov 5 (Reuters) - France's Alstom, which is selling most of its energy equipment business to General Electric, said it expects its remaining rail arm to grow and generate cash this year after registering record orders in the first half.

Over the medium term, the engineering group said it expects sales at the "new Alstom" to grow over 5 percent per year like-for-like and its operating margin to gradually improve within a 5 to 7 percent range.

Alstom said in a statement that it would hold a shareholder meeting on Dec. 19 to approve the 12.4 billion euro ($15.55 billion) deal with General Electric, which won the green light from French Economy Minister Emmanuel Macron on Wednesday.

"The project with General Electric is progressing well," said Chief Executive Officer Patrick Kron.

The level of cash to be returned to shareholders from the deal, as well as the group's targeted balance sheet once it refocuses on its smaller transport arm, will be communicated ahead of the meeting, Kron added.

Some analysts expect Alstom to put aside around 2 billion euros for rail acquisitions and return 2 billion to shareholders via a special dividend or share buyback.

Alstom has suffered from weak orders for power equipment since the 2008 economic crisis that hit its cash flow and credit ratings.

But when it agreed earlier this year to sell the cash-burning business to bigger U.S. rival GE, the news sparked a two-month tug-of-war with a French government worried about losing an industry champion.

The government intervened in the deal to preserve jobs and ensure Alstom still had a future in the strategic power sector. After tough negotiations, GE agreed to set up three 50:50 joint ventures in electricity grids, renewable energy and nuclear power.

Alstom will in return buy GE's rail signalling unit to beef up its rail arm, while the government secured an option to become Alstom's top shareholder with up to 20 percent.

Alstom on Wednesday forecast "high single-digit" percentage growth in sales and positive operating free cash flow for the year to March 31 after revenue rose 13 percent in the first half of its fiscal year.

Alstom won 6.4 billion euros of orders in the six-month period, more than twice the level of the same period a year ago, helped by a 4 billion euro rail contract in South Africa. First-half sales reached 3.1 billion euros.

Its operating margin, at 5 percent after corporate costs, improved by 30 basis points, helped by tight cost control, Alstom said. The transport activities posted an 85 million cash outflow - compared with a 1 billion outflow for the power arm.

Alstom excluded activities being sold to GE in its orders, sales and operating income figures. (1 US dollar = 0.7974 euro) (Reporting by Natalie Huet; Editing by James Regan)

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