By Dominique Vidalon

PARIS (Reuters) -French spirits maker Remy Contreau on Friday dropped its forecast that its full-year sales would gradually recover after quarterly sales fell more than expected amid worsening market conditions in China and uncertainty over the timing of a recovery in the U.S.

The company producing Remy Martin cognac and Cointreau liqueur said it now expected a double-digit fall in organic sales for the year, also impacting its profit margin.

Remy reported group sales of 318 million euros ($344.14 million) in the July-September quarter of its 2024/25 financial year ending on March 31, down by 16.1%. Analysts had predicted a 15.4% decline.

Cognac sales alone fell 20.7% in the quarter against analysts expectations of an 18% drop.

Remy Cointreau makes some 70% of sales from cognac, with the vast majority of those in the U.S. and Chinese markets.

A tough economy is hitting consumer demand in China while excessive inventories in the United States weigh on producers.

In China, cognac makers like Remy also face temporary anti-dumping measures, which Beijing imposed on brandy imports from the European Union earlier this month.

Remy said that if the Chinese decision was confirmed, its impact would be marginal for fiscal year 2024/25, and it would activate its action plan to mitigate the effects from 2025/26.

Larger rival Pernod Ricard (EPA:PERP) last week reported a bigger-than-expected fall in quarterly sales, caused partly by weakness in China while luxury giant LVMH, owner of Hennessy cognac, also missed estimates for its third quarter sales, again pointing to China.

($1 = 0.9240 euros)