UPDATE 2-Retailer Casino's profit outlook hits shares

* Shares drop, analysts say 2018 guidance cautious

* 2017 operating profit 1.242 bln euros, up 20.1 pct

* French 2017 operating profit 556 mln euros, up 9.4 pct(Adds share reaction, analyst comments, details)

By Dominique Vidalon

PARIS, March 8 (Reuters) - Retailer Casinodelivered a cautious profit outlook along with its 2017 resultson Thursday, at a time when it is under pressure to show it canrevive profits in its main market of France.

Casino, whose credit rating was cut to junk by Standard &Poor's in March 2016, is also experiencing slower growth inBrazil, its second-biggest market by revenue.

Its shares fell 4.7 percent by 0949 GMT after Casino vowedto grow profits in 2018 with the help of cost savings as itposted a 20.1 percent jump in its 2017 operating profit, whichincluded tax credits in Brazil.

For 2018, Casino said it aimed to deliver organic growth inconsolidated operating profit for the group above 10 percent,excluding tax credits.

"The outlook, whose encrypted translation is not very easyat first sight, seems rather cautious. Forex headwinds shouldnot be neglected in 2018, so we do not see much room for EPSupgrade," said Bryan Garnier analysts, who kept a "neutral"rating on the stock which is hovering near its lowest levelsince December 2016.

Barclays analysts also pointed to a rise in 2017 net debt asa concern.

Casino, which has stepped up its online offerings in recentmonths in the face of competition from Amazon, said itwould benefit from a deal to use British online retailer Ocado'sE-commerce platform to expand its business.

It kept its 2017 dividend unchanged at 3.12 euros and vowedto improve cash flow and cut its net debt this year thanks toasset sales, notably Brazilian appliance and electronics unitVia Varejo which it has put up for sale.

Casino also said that its French operations had shown signsof improvement, with profits at its main French arm rising to556 million euros in 2017 against 508 million euros in 2016 - inline with Casino's guidance for profits above 550 million euros.

Casino faces tough competition with the French market, butthe company said it was targeting organic growth in France ofabove 10 percent in operating profit for 2018, excluding realestate activities.

In recession-hit Brazil, where Casino controls retailerGrupo Pao de Acucar (GPA), the group's performancehas been helped by its cash-and-carry Assai format, which hasproven popular with customers in that country.

Casino shares, which rose 10.9 percent in 2017, have fallenaround nearly 20 percent so far in 2018, underperforming theirEuropean sector.

($1 = 0.8060 euros)(Reporting by Dominique Vidalon;Editing by Sudip Kar-Gupta and Elaine Hardcastle)