* Operating profit 488 million euros, vs forecast 498 million
* To cut a further 150 million euros of costs in 2010
* Confirms debt reduction plan
* Shares fall 3.5 percent
(Adds analyst comment, detail, background, updates shares)
By Noelle Mennella and Mark Potter
PARIS/LONDON, Aug 27 (Reuters) - French supermarket group Casino missed forecasts with a 9.1 percent drop in first-half operating profit, knocking its shares and overshadowing news it will squeeze out more costs next year.
Casino, which runs over 10,000 stores in 10 countries, said on Thursday it would cut 150 million euros ($214 million) of costs in 2010 on top of previously announced plans to reduce overheads by the same amount this year.
Chairman and chief executive Jean-Charles Naouri said trading was "challenging", and Casino was stepping up plans for more cheaper own-brand products and to transform the operating model of its Geant hypermarkets, where non-food ranges have been hit hard by the economic downturn.
He did not give further details.
However, some analysts were concerned whether the group would hit full-year profit forecasts, and also at the lack of progress in plans to sell assets to reduce its debts.
"We think there is now risk of some estimate cuts today," Credit Suisse analysts said, noting the group now needs a 3.9 percent rise in second-half operating profit to achieve the full-year consensus forecast of 1.26 billion euros.
At 1030 GMT, Casino shares were down 3.5 percent at 52.18 euros, the biggest fall on the DJ Stoxx European retail index.
Casino, which also runs Franprix and Leader Price discount stores, said first-half operating profit fell to 488 million euros, missing analysts' average forecast of 498 million in a Reuters Estimates poll.
As previously announced, sales rose 1.3 percent excluding acquisitions, petrol and calendar effects, while the trading margin fell 26 basis points.
Retailers across the world are struggling with a downturn in consumer spending. Supermarkets have fared better than most, helped by their focus on low prices. But growth has slowed sharply recently in France, as food price inflation has receded and market leader Carrefour has cut prices.
Carrefour, the world's second-biggest retailer behind U.S. group Wal-Mart, is due to report detailed first-half results on Friday. It gave headline numbers in a profit-warning in June, alongside a big cost-cutting and turnaround plan.
DEBTS
Casino has been dogged by concerns over its debt pile as well as the level of borrowings at 49 percent shareholder Groupe Rallye.
It announced plans in March to sell 1 billion euros of assets by the end of 2010 to cut debts, but some analysts are disappointed there have been no major deals announced so far.
Net debt rose to 6 billion euros June 30, up from 5.87 billion a year earlier. But Casino said it was sticking to its goal of reducing its ratio of net debt to earnings before interest, tax, depreciation and amortisation (EBITDA) this year, and cutting it to less than 2.2 percent by the end of 2010.
Casino's shares trade at 11.2 times forecast earnings, below Wal-Mart on 13.4 and Carrefour on 14.4, according to Reuters data.
"Valuation remains undemanding despite a recent rally but we remain concerned about the sustainability of Casino's high margins with a threatened top line, and the high leverage of its parent company Rallye," JP Morgan analysts said in a research note, keeping a "neutral" rating on the shares.
Casino said it made a first-half net profit of 231 million euros, above a forecast for 189 million, helped in part by a lower than expected tax rate. (Editing by Dan Lalor/Will Waterman) ($1 = 0.7024 euro)