UPDATE 1-Israeli retailer Super-Sol's Q4 profit sinks 42 pct
* Financing costs rise to 66 mln shekels
* Sales rise to 2.7 bln shekels
* Share price falls 4 pct
(Adds dividend, share reaction, analysts' comments)
JERUSALEM, Feb 9 (Reuters) - Israeli retailer Super-Sol (SAE.TA) on Monday reported a 42 percent drop in fourth quarter net profit, missing market forecasts as financing costs weighed on results.
Super-Sol, Israel's largest supermarket chain, posted net profit of 50 million shekels ($12 million), down from 86 million a year earlier.
Sales at Super-Sol, which has a more than 36 percent market share and a network of 232 stores, rose to 2.7 billion shekels from 2.58 billion. Same-store sales increased 5.0 percent.
"The company succeeded in maintaining high profit margins," the Harel Finance brokerage wrote in a note to clients.
But financing costs swelled to 66 million shekels in the quarter due to higher inflation which increased payments on its inflation-linked bonds.
"We do not view this as a long-term issue and model for 2009 a return to normal financial cost levels," Gil Dattner, an analyst at the Excellence Nessuah brokerage, wrote in a note.
Super-Sol's shares were down 4.0 pct at 14.11 shekels in late trading, compared with declines of 0.7 percent on the broader market.
Dattner said that slowing growth rates in same store sales indicated the company was beginning to feel the pinch of a weaker economy.
"No doubt the negative macro environment will continue to affect the company in 2009, and we have modeled for negative growth this year," he said. "However, if Super-Sol is able to prevent significant damage to profitability, then we believe it will be able to weather the storm in good shape."
Super-Sol declared a dividend of 108 million shekels, or 0.5 shekel per share, to be paid on March 4.
Super-Sol's chief rival, Blue Square (BSI.N) (BSI.TA), is expected to report results next month.
($1 = 4.04 shekels)
(editing by John Stonestreet)
