By Dominique Vidalon
PARIS (Reuters) - French spirits group Pernod Ricard
The owner of Mumm champagne, Absolut vodka and Martell cognac, which had expected Chinese demand to start recovering from the second half of its financial year to June 30, said it remained confident over the medium- and long-term potential of the country, however.
The world's No. 2 spirits group behind Britain's Diageo
A Reuters poll of six analysts showed Pernod Ricard was seen to be on course for 2.3 percent growth.
First-half underlying sales were flat at 4.57 billion euros ($6.2 billion), reflecting an 18 percent sales fall in China, while underlying operating profit rose 2 percent to 1.359 billion, thanks mostly to cost control.
Second-quarter sales showed a sequential improvement, however, rising 2 percent after falling 1 percent in the previous three months. This came mostly from a robust performance in Europe and a return to sales growth in the United States.
Pernod Ricard makes 12 percent of its sales in China, its second-biggest market after the U.S. Like rivals Diageo and Remy Cointreau
Pernod on Thursday unveiled a plan to improve operational efficiency that it said would save an annual 150 million euros over three years and whose proceeds would be partly reinvested to support brand development.
At the end of last year, net debt was cut by 102 million euros to 8.6 billion.
Pernod shares are up 0.5 percent this year, outperforming a 1.9 percent decline in the European food and beverage sector
Pernod trades at 16.8 times 12-month forward earnings, against 23.4 times for Remy and 17.22 times for Diageo, a discount that already prices in some of the Chinese woes.
($1 = 0.7359 euros)
(Editing by Andrew Callus and James Regan)