Pernod hit by Absolut charge, cautious on China

* FY 2014/15 underlying profit up 2 pct vs 2.5 pct estimates

* Takes 404 mln eur impairment for Absolut vodka in U.S (Other OTC: UBGXF - news) .

* Chinese FY 2015/16 sales make slow start, keeps mid-term goals

* Shares (Berlin: DI6.BE - news) down 5 pct (Recasts, adds CFO comment, share price, analyst)

By Dominique Vidalon and Matthieu Protard

PARIS, Aug 27 (Reuters) - Pernod Ricard (Paris: FR0000120693 - news) delivered full-year profit below expectations on Thursday, sending its shares down 5 percent as a writedown on its flagship Absolut vodka brand highlighted difficulties in its U.S. market.

The world's second-biggest spirits group behind Britain's Diageo (LSE: DGE.L - news) also poured cold water on recent hopes of an improvement in China, pointing to a "soft" start to the new financial year in a "tough environment".

Underlying operating profit growth of 2 percent to 2.24 billion euros ($2.54 billion) for the year to June 30 was in line with the company's guidance of 1 percent to 3 percent, but short of the 2.5 percent expected by analysts.

"The shortfall looks to be in the Americas," Societe Generale analysts said.

The maker of Mumm champagne, Martell cognac and Jameson whiskey faces slow growth in China and the United States, with sales in the two key markets a top priority for Chairman and Chief Executive Alexandre Ricard.

VODKA CHARGE

Pernod Ricard, shares of which fell 5.3 percent by 1042 GMT, bought Sweden's Vin & Sprit for $8.34 billion in 2008 to boost its presence in the United States, the world's biggest spirits market.

The deal valued the owner of Absolut vodka at about 21 times 2007 gross operating profit, a multiple that analysts said set new standards for spirits deals and brought debt to levels that have since limited Pernod Ricard's firepower for large acquisitions.

Absolut, Pernod Ricard's largest brand, has performed well in most markets but has struggled in America as trendy drinkers turn to brown spirits and niche vodka brands such as Texas-based Tito's Handmade Vodka.

The French group, which has been trying to revive the brand through the launch of luxury vodka Absolut Elyx, said it took an impairment charge of 404 million euros after Absolut's U.S. sales fell 5 percent for the second year running.

Chief Financial Officer Gilles Bogaert told Reuters the target was to stabilise Absolut's U.S. sales in three to five years.

Like rivals Diageo and Remy Cointreau (Swiss: RCO.SW - news) , Pernod has also been hit by a Chinese government crackdown on luxury gift-giving and personal spending by civil servants, as well as slowing economic growth in its second-biggest market.

The situation in China improved slightly, with a good Chinese New Year helping to limit full-year sales to a decline of 2 percent after a 3 percent drop in the first nine months of the year and a 23 percent tumble in 2013/14.

The improvement, however, could be fleeting.

"We remain cautious on China as consumption was less dynamic recently," Bogaert said. "In the current climate, achieving performance in line with 2014/15 in China this year would be a good performance."

Bogaert added that he remains confident the company will achieve its medium-term target of Chinese sales growth approaching 10 percent. ($1 = 0.8818 euros) (Editing by James Regan and David Goodman)