* Sees low single-digit organic sales growth in 2014
* Forex to cut 40 basis points off 2014 EBITA margin
* Prioritises operational efficiency after Invensys deal
* Shares rise 3 percent (Adds share price, company comments on strategy, share buybacks)
By Natalie Huet and Gilles Guillaume
PARIS, Feb 20 (Reuters) - Electrical gear maker Schneider Electric said on Thursday it was shifting its focus to making its existing business more efficient after a decade-long acquisition spree that has seen the group triple in size.
Last year's 3.4-billion-pound ($5.7 billion) takeover of Invensys completed its portfolio and now it aims to strengthen its high-margin industrial automation business and its presence in the energy sector while cutting costs.
It confirmed on Thursday it expects 400 million euros in recurring additional revenue by 2018 and 140 million in recurring cost savings by 2016 from the acquisition.
Shares in Schneider rose 3 percent. Societe Generale analysts wrote in a note: "This is a real shift in the M&A strategy, which should please the market."
The world's No. 1 maker of low-and-medium voltage equipment, which has taken over more than 100 companies in the last 10 years, said it expected limited sales growth this year while unfavourable exchange rates continue to weigh.
Adverse exchange rates in emerging markets, notably in Russia, India, Brazil and Indonesia, took 879 million euros ($1.21 billion) off sales - 3.7 percentage points of revenue growth - and 0.42 percentage points off its margin last year.
The company, which earns about 75 percent of its revenue in foreign currencies and 40 percent in emerging markets, said it expected the impact on both sales and operating margin this year to be similar to that seen in 2013.
Schneider plans to raise sales prices and shift more production to countries including India and Russia to protect margins from currency swings, but declined to give details or say whether this would imply plant closures in Europe.
Last year, 50 percent of its production costs were in emerging markets, up from 41 percent in 2008 and 18 percent in 2004. About 40 percent of its more than 140,000 workforce as of 2012 is in emerging markets while a third is in Western Europe.
The company said business in Western Europe was showing signs of stabilising and had the potential to improve in the second half.
Schneider's products help utilities distribute electricity, and it makes automation systems for the car and water treatment industries. Like rival engineering firms Siemens and ABB, it has seen sales weighed down by tighter capital spending due to austerity measures across Europe.
Schneider forecasts low single-digit organic sales growth this year, excluding currency effects, underpinned by solid trends in North America and China.
Adjusted earnings before interest, taxes and amortisation (EBITA) fell 3 percent to 3.41 billion euros last year, while sales fell 2 percent to 23.55 billion, undershooting a Thomson Reuters I/B/E/S average estimate of 23.8 billion.
The company posted a record 2013 free cash flow of 2.19 billion euros and maintained a stable dividend of 1.87 euros per share. Chief Financial Officer Emmanuel Babeau said he did not rule out share buybacks.
"If at certain point in time, the intensity of the cash flow generation means that we are getting to a lower leverage than what we want on our balance sheet, we certainly don't discard the possibility of share buybacks," he said. ($1 = 0.7271 euros) (Editing by Louise Ireland)