UPDATE 3-Pernod says drinks needed in hard times

(Rewrites with finance director interview, adds analyst comment, details)

By Astrid Wendlandt and Noelle Mennella

PARIS, July 24 (Reuters) - In tough times, consumers need their tipple, Pernod Ricard (PERP.PA) said on Thursday as it forecast demand for wines and spirits would remain strong in the year to June 2009 in spite of the spending downturn.

"Even in difficult years, the consumer protects what for him holds pleasure value," Pernod Ricard Finance Director Emmanuel Babeau told Reuters in an interview.

Babeau forecast emerging markets would stay buoyant, pulled by India, Russia and China while growth would be more subdued in the United States and in Europe, particularly in Spain, Italy and Ireland.

Pernod, the world's No. 2 wine and spirits group after Diageo (DGE.L), with brands such as Beefeater gin, Malibu, Glenlivet, Jameson and Ballantine's whisky as well as its quintessentially French Ricard aniseed drink, did not give a precise outlook for its current year, however. It would only say that it expected improved margins.

For the year just ended, Pernod lifted its growth forecast for operating profit from ordinary activities to 13 percent from the 12 percent forecast in April, citing improved pricing and product mix.

"The confidence expressed by the group validates analysts' expectations," said Laetitia Delaye, analyst at French broker Kepler.

Delaye said the market was looking for like-for-like sales growth of 7 percent in 2008-2009 -- a slowdown from 9 percent in 2007-2008 -- and operating profit growth of 10 percent.

The group's relatively positive outlook comes after it said it had seen a slowdown in Western markets in its half-year to June and posted full-year sales that missed forecasts.

"It is clear that the slowdown in Western markets has occurred in H2 (the second half to June 30)," Babeau told a conference call with analysts, adding there had been weakness in Spain and France.

The decline in sales at the group, the product of a 1975 merger between Pernod and Ricard and which is also behind the Mumm and Perrier Jouet champagne houses, accelerated in the fourth quarter with revenues down 3 percent against the same period last year after falling 1 percent in the third quarter.

In France, Babeau said "the difficult part of the picture in H2 was Ricard which was affected by the smoking ban and difficult weather."

Overall, full-year sales rose 2 percent to 6.589 billion euros in the year to June 30, below expectations of 6.67 billion euros based on Reuters Estimates.

ABSOLUT ON TRACK

Pernod on Thursday also said it had completed its acquisition of Vin & Sprit, the Swedish drinks group behind Absolut, the world's best-selling premium vodka, for 5.69 billion euros ($8.95 billion), including debt.

The deal, its third major acquisition after Seagram in 2001 and Allied Domecq in 2005, raised debt to 11.9 billion at June 30 on a pro-forma basis from a little over 6 billion euros.

But Pernod said it planned to sell assets worth around 1 billion euros ($1.57 billion) to reduce debt and the group was confident in achieving the top end of its estimated range of cost savings of 125-150 million euros.

The disposals, coupled with improved cash generation and profitability, would help cut net debt to below four times earnings before interest, tax, depreciation and amortisation (EBITDA) from six times EBITDA within the next three years, it said.

The group's gearing, lifted by the V&S deal, has been a source of concern for investors.

"The 1 billion-euro figure should reassure debt-obsessed investors," HSBC said in a note.

The news initially lifted the shares more than 6 percent but by 1117 GMT they were only up 0.86 percent at 57.44 euros while the DJ Stoxx food and beverage index .SX3P was down 1 percent.

"This has been one of the best years for Pernod Ricard over the past 10 years with strong growth in emerging markets and a limited slowdown in Western Europe and satisfactory growth of our premium brands in the U.S," Babeau told the conference call. (Editing by Louise Ireland and Quentin Bryar)