* Q4 cognac sales down 32.3 pct vs 32 pct in Q3
* Sees 35-40 pct fall in FY operating profit
* Expects "tangible" net debt hike as maintains investments (Adds details from statement)
By Dominique Vidalon
PARIS, April 17 (Reuters) - Remy Cointreau warned on Thursday that full-year operating profit would fall between 35 and 40 percent as a Chinese government crackdown on ostentatious spending that is hurting demand for premium cognac showed no signs of abating.
The maker of Remy Martin cognac, Cointreau liqueur and Mount Gay Rum said it was nevertheless maintaining investments in its brands and distribution networks, reflected in a "tangible" increase in net debt at the end of March.
In November, the French spirits group had already warned that full-year operating profit would fall by at least 20 percent, blaming China.
"The trend did not improve in the fourth quarter in China", Remy said in a statement, adding that it pursued its destocking effort against "the backdrop of further stringent measures to restrict conspicuous consumption".
Like global rivals such as Diageo and Pernod Ricard , Remy has been hit by a Chinese government crackdown on gift-giving and personal spending by civil servants, as well as slowing growth in the world's second-biggest economy.
Larger rival Pernod said last month it expected demand in China to remain sluggish until 2015 and that the anti-corruption clampdown was getting tougher and was now targeting traditional Karaoke bars where high-end tipples such as cognac are consumed.
Remy Cointreau said on Thursday that group sales reached 186 million euros ($256.8 million) in the three months to March 31.
The like-for-like year-on-year sales decline was 16.1 percent, against 18.9 percent in the third quarter.
Cognac sales alone slumped 32.3 percent in the fourth quarter, having fallen 32 percent in the third, which was more than analysts' average estimate of a 30 percent fall.
Cognac accounts for 80 percent of Remy's operating profit, with China making up half of that. In addition, Remy's focus on deluxe drinks like Louis XIII cognac, which sells for 2,500 euros a bottle, makes it more vulnerable than some rivals to the Chinese government moves, analysts say.
On the bright side, the United States continued to deliver good cognac sales, as did Russia, Japan and Africa. The liqueurs and spirits division saw a quarterly sales decline of 7 percent but a 3 percent rise on the full year.
Despite its difficulties in China and its management vacuum - the group is looking for a permanent CEO - Remy still trades at a premium to peers. The stock is valued at 30.56 times 12-month forward earnings, against 17.76 for Pernod and 17.89 for Diageo, according to Reuters data. ($1 = 0.7243 Euros) (Editing by James Regan)