* First half operating profit up 3 pct to 1.438 bln euros
* Keeps 2015-16 goal of 1-3 pct rise in operating profit
* Shares slide 7 percent (recasts with CEO comments, shares, analyst)
By Dominique Vidalon
PARIS, Feb 11 (Reuters) - The situation in China remains challenging for spirits company Pernod Ricard and sales in its second biggest market could fall up to 10 percent this year, the company said on Thursday.
Like rivals Remy Cointreau and Diageo, Pernod Ricard has been hurt by a government clampdown on luxury gifts and a slowing economy in China, though analysts said it appeared to be taking a more cautious line.
Pernod Chairman and CEO Alexandre Ricard told Reuters that while he remained “very confident” about long-term prospects in China the economic climate now was “not good” and later said sales this financial year could fall by 5 percent to 10 percent.
His comments contrasted with those of Remy which last month said premium cognac sales in China were recovering.
By 1135 GMT, Pernod Ricard shares were nearly 7 percent down, underperforming the European sector and touching their lowest since the start of October.
Pernod Ricard was “more cautious than some of their competitors on China, essentially maintaining a wait-and-see’ stance until the results of Chinese New Year become clear,” said Bernstein analyst Trevor Stirling in a note.
In China, sales fell 2 percent in the six months to the end of December, helped by earlier shipments than a last year for the Chinese New Year. Stripping out this factor, sales fell 8 percent in the first half though cognac did better than whiskey.
Still, the world’s second-largest spirits company behind Britain’s Diageo kept its overall annual profit growth target unchanged as robust demand in its main U.S. market and cost controls lifted first-half operating profit 3 percent.
The owner of Absolut vodka, Martell cognac and Jameson whiskey said it was expecting a rise of 1 percent to 3 percent in underlying operating profit for the year ending June 30.
In the United States, Pernod’s leading brand Absolut has been struggling as trendy drinkers turn to brown spirits such as bourbon and niche vodkas like Texas-based Tito’s Handmade Vodka.
Sales of Absolut were down in value but the underlying trend was improving, in line with the company’s medium-term aim of stabilising Absolut sales, Pernod said.
$1 = 0.8860 euros Aditional reporting by Pascale Denis; editing by David Clarke