News: UPDATE 1-Australia's Woolworths cuts dividend as half year profit slides

• 2017 H1 underlying profit A$785.7 mln vs A$943.6 mln 2016
• Interim dividend 34 cents vs 44 cents (2016)
• Underlying h1 sales A$29.1 bln vs A$28.3 bln

(Adds company comment, dividend, earnings breakdown)

SYDNEY, Feb 22 (Reuters) - Australia's No. 1 supermarket operator by sales, Woolworths Ltd (WOW), slashed its half yearly dividend as a price war forced it to cut shelf prices and sent underlying profit down by a sixth.

Net profit from continuing operations was A$785.7 million ($603 million) for the six months to January. On a statutory basis, the company swung to an interim net profit of A$725.3 million after writedowns on its home improvement unit led to a A$973 million loss the previous first half.

Excluding discontinued businesses like service stations and home improvement, sales rose 2.6 percent to A$29.1 billion. The company cut its interim dividend to A$0.34 from A$0.44 the previous year, its lowest interim dividend since 2006.

"We expect to see further progress in the second half as we look to restore sustainable growth, however we still have a long way to go," the company said in a statement on Wednesday, which did not offer earnings guidance.

Under Chief Executive Officer Brad Banducci, who has been in the role one year, Woolworths has been trimming margins and selling non-core assets to cope with competition from No. 2 supermarket rival Coles, owned by Wesfarmers Ltd (WES), and fast-expanding, low-overhead German chain ALDI Inc [ALDIEI.UL].

In 2016, the company unveiled a plan to sell 527 service stations to Britain's BP Plc for A$1.8 billion, after soft oil prices led to declines in earnings from that business unit. The deal is awaiting regulatory approval.

It also closed a home improvement joint venture with United States-based Lowe's Companies Inc , incurring A$2.7 billion of write-off charges, after it failed to capitalise on a renovation boom and take business from Wesfarmers' dominant hardware chain Bunnings.

Woolworths has said it may sell an online apparel and homewares store, EziBuy. On Wednesday it said the sale of Ezibuy was "progessing" without elaborating.

The discount department store which was previously joined with Ezibuy, Big W, posted a pre-tax loss of A$27.2 million, from a pre-tax profit of A$135.1 million in the prior first half, because of an impairment charge.

Woolworths posted its results before the start of share trading on Wednesday. Its shares have risen about 6 percent since the start of 2017, while the broader market has risen 2.2 percent, as investors put their faith in Banducci's turnaround plan.

($1 = 1.3029 Australian dollars)