China Mengniu says Jan-May sales down, dairy scandal impact over

* Jan-May sales at 80 pct of usual level

* Effects of melamine scandal on Mengniu finished - CEO

* Sees stable pricing through year-end

By Donny Kwok

HONG KONG, June 10 (Reuters) - China Mengniu Dairy (2319.HK), one of the firms found to have sold tainted milk products last year, said on Wednesday its sales were 20 percent lower than normal in the first five months of 2009.

But people were returning to more typical buying patterns for dairy products and the impact of the scandal was "basically over", the chief executive officer of China's top milk producer told reporters on the sidelines of the company's annual meeting in Hong Kong.

"The (negative) impact is basically over," Yang Wenjun said. "Our products are 100 percent safe to consume. All our products are 100 percent up to standard."

Mengniu was among several firms in China found to have sold milk contaminated with melamine last year. At least six babies died from drinking infant formula contaminated with the toxic industrial compound that can falsely raise the results on protein level tests.

Yang also said prices of Mengniu's dairy products were stable so far and he expected them to remain so for the rest of the year.

Chairman Jiao Shuge said demand for daily necessities, such as dairy products, has been less affected than spending on more discretionary items during China's economic slowdown.

In February, the milk producer said Chinese authorities had concluded that an additive osteoblast milk protein (OMP) in its milk products was safe to consume. [ID:nHKG96641]

The OMP incident triggered a drop in sales of Mengniu products, forcing it to lose some market share to rivals Yili (600887.SS) and Bright Dairy (600597.SS), analysts said.

Mengniu posted a 948.6 million yuan ($138.8 million) loss in 2008 compared with a 935.8 million yuan profit the previous year.

Its shares fell about 65 percent in 2008, but have rebounded 86 percent so far this year. The stock was up more than 4 percent late in the trading day on Wednesday. ($1=HK$7.8=6.833 yuan) (Reporting by Donny Kwok; Editing by Doug Young and Lincoln Feast)