* 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 comments from executive, fund manager)
PARIS, March 8 (Reuters) - Retailer Casino delivered a cautious profit outlook on Thursday that hit its share price, as the French company grapples with reviving profits in its main markets of France and Brazil.
Casino, which faces tough competition in France and a recession in Brazil, said it will step up its online offerings in the face of challenges from Amazon and will cut debt after it rose sharply in 2017.
The retailer said it expects to grow profits in 2018 with the help of cost savings as it posted a 20.1 percent jump in its 2017 operating profit to 1.242 billion euros, which included 198 million euros in tax credits in Brazil.
Casino's finance chief Antoine Giscard d'Estaing told a news conference he considered analysts estimates for 2018 earnings of 1.24 billion euros before interest and tax (EBIT), as "a floor".
Casino is aiming to deliver organic growth in consolidated operating profit above 10 percent, excluding tax credits.
Tax credits in Brazil would again be "significant" this year, d'Estaing said.
Casino's shares were down by 5.3 percent at 41.96 euros in late session trading, among the worst performers on the Paris and broader European markets as investors were left unconvinced.
The company's credit rating was cut to junk by Standard & Poor's in March 2016.
Gregoire Laverne, a fund manager at Roche-Brune Asset Management, said the fall was due to a "lack of clarity and many non-recurring items in 2017 results which worry the market."
"We don't own any Casino shares because the quality of its results and the chances of the company producing a better performance are not that good," added Laverne.
Analysts at brokerage Bryan Garnier kept a "neutral" rating on Casino shares, saying its earnings outlook was cautious.
HOME MARKET IMPROVES
Casino kept its 2017 dividend unchanged at 3.12 euros and said it would improve cash flow and cut its net debt this year through asset sales such as Brazilian appliance and electronics unit Via Varejo, which it has put up for sale.
Via Varejo's sale process was still underway and management was not rushing to "press the sale button" as the unit's performance and valuation was improving, said Casino chairman and chief executive Jean-Charles Naouri.
Casino will expand its online offering through a deal to use UK online retailer Ocado's platform.
There are signs of improvement in the home market which contributes 55 percent of group sales, Casino said, with profits in France rising 9.5 percent to 556 million euros.
It is targeting organic growth in France of above 10 percent in operating profit for 2018, excluding real estate activities.
In France, Casino has cut prices at Geant hypermarkets and reduced retail space for non-food items in response to competition from online and smaller convenience stores. It has also increased its focus on organic and fresh food products.
In Brazil, where Casino controls retailer Grupo Pao de Acucar (GPA), the group's performance was helped by the success of a cash-and-carry format.
Casino shares, which rose 10.9 percent in 2017, have fallen around nearly 20 percent so far in 2018, underperforming their European sector.
($1 = 0.8060 euros) (Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and Elaine Hardcastle)