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Pernod Ricard says sales improved in Chinese New Year

By Dominique Vidalon PARIS (Reuters) - French drinks group Pernod Ricard said on Thursday that sales in China, its second-largest market, improved year-on-year during the Chinese New Year celebrations, and kept its target for higher operating profit this financial year. Pierre Coppere, chief executive for Asia, told a conference call on the region that Pernod's cognac sales in China rose 13 percent by volume and 3 percent by value in December-to-February, which covers the Chinese New Year, but that whisky sales by volume fell 6 percent. Coppere said the Chinese market remained "challenging" as a government campaign against conspicuous spending would "continue to be enforced". Like rivals Diageo and Remy Cointreau , Pernod has been hit by a crackdown on luxury gift-giving and personal spending by civil servants in China, and by a slowdown in growth in the world's second-biggest economy. Pernod shares rose as much as 2.8 percent in morning trade before retreating. By 1330 GMT, they were still up 0.14 percent, outperforming their sector <.SX3P>, which was down 1.21 percent. Sales of Pernod Ricard products from wholesalers to retailers, bars and restaurants in China rose 7 percent year-on-year by volume in the period, and rose 1 percent by value. This compared with a volume decline of 3 percent in the first half to Dec. 31, Coppere said. In response to the Chinese crackdown on conspicuous spending, Pernod has launched lower-priced cognacs such as Noblige, which is selling well with the local middle class. Year-to-date Pernod Ricard sales volumes from wholesalers to retailers, bars and restaurants in China were up 1 percent, which the group said was consistent with its guidance for full year 2014/15 organic growth in profit from recurring operations of between 1 percent and 3 percent. The world's No.2 spirits group by sales after Britain's Diageo makes 12 percent of sales and 15 percent of profit in China. Asia now accounts for 39 percent of sales and 42 percent of annual profit. In February, Pernod Ricard said that its sales in Asia were flat in the first half ended Dec. 31, hit by a 16 percent slump in Chinese revenues. (Editing by James Regan and Kevin Liffey)