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UPDATE 2-Finland's Wartsila sees shares drop after earnings miss forecast

* Wartsila’s operating profit rose 18% year-on-year

* Growth offset by decreases in revenue and cashflow

* Shares down 4% (Adds share reaction, analyst comments)

HELSINKI, July 20 (Reuters) - Finland’s Wartsila on Tuesday reported a weaker-than-expected rise in second-quarter earnings and said the pandemic continued to impact the cruise industry and power plant orders.

The marine and energy equipment maker’s operating profit rose 18% to 58 million euros ($68 million) from 49 million a year earlier, but was short of the 73.74 million expected by 12 analysts polled by Refinitiv.

The growth in profit was offset by a 7% decrease in net sales and 3% decrease in cashflow year-on-year.

“In our key energy markets, the market situation stabilised, but many investments in new power plant capacity still continued to be postponed,” Chief Executive Hakan Agnevall said in a statement.

He added the company estimates third-quarter demand to be better than last year.

Wartsila’s shares fell more than 4%.

“A slightly negative share reaction seems reasonable but by no means should the price drop several percent,” analyst Anssi Raussi from OP Markets told Reuters.

He said the market already knew the company would probably have to pay more taxes in 2021 than last year.

“It lowers the earnings per share estimate but that will be fixed in the coming years when the company makes profit in countries where it now has recorded losses,” Raussi said.

While analysts had expected earnings per share to rise to 0.09 euros, they rose to 0.06 euros from 0.04 euros.

Aided by strong growth in its service business, Wartsila’s order intake, an indication of future revenue, rose 14% to 1.15 billion euros compared with 1.01 billion a year prior.

$1 = 0.8490 euros Reporting by Essi Lehto; Editing by Christopher Cushing, Louise Heavens and Bernadette Baum

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