COPENHAGEN, Aug 10 (Reuters) - Danish services group ISS , which has put its French business up for sale, said on Thursday the decision to divest was due to a lack of scale and poor growth prospects for the unit that had made it hard to compete with local rivals.

ISS on Wednesday announced French impairments and writedowns of 1.25 billion Danish crowns ($185 million) and said it would only keep the part of its business in France that serves the group's global customers.

"We're simply lacking scale in France," CEO Jacob Aarup-Andersen told Reuters on Thursday, adding that the ISS business was significantly smaller than local competitors.

"Our customer portfolio is skewed towards more heavy industries like aviation, so its a customer portfolio that is inherently not growing as much as you will see in the overall market," Aarup-Andersen said.

In its earnings report late on Wednesday, ISS posted stronger than expected second-quarter organic growth but also a negative free cash flow and disappointing margins for the first half of the year, sending its shares down 9.5% at 1020 GMT.

ISS' free cash flow came in at a negative 1.1 billion Danish crowns, while the operating margin, excluding its French business, stood at 3.6%.

"Even if ISS maintains its expectations for free cash flow, it seems harder to catch up because you have to reverse all the receivables in the second half of the year," DNB analyst Mads Brinkmann Andersen said.

"So on the free cash flow front, it's going to be a slightly pressured half-year, I think," Brinkmann Andersen said.

ISS expects to increase prices further "in the foreseeable future," CEO Aarup-Andersen said, adding "I think the biggest part of the price increases are behind us, but it would be naive to think that inflation is gone." ($1 = 6.7618 Danish crowns) (Reporting by Louise Breusch Rasmussen, editing by Terje Solsvik)