July 16, 2007 / 9:26 AM / in 10 years

RPT-Danone China dispute to hit sales; 07 growth on track

(Repeats to reach more customers)

PARIS, July 16 (Reuters) - French food company Danone (DANO.PA) said a trademark dispute with Chinese joint venture partner Wahaha could impact its revenue in future but that it expected to meet its 2007 growth targets.

“We remain very confident of reaching growth targets, both in the first half and full year 2007,” a Danone spokesman said in an email summarizing talks held with analysts.

“However, we did confirm that ongoing discussion with our Chinese partners would have an unfavorable impact on our sales going-forward.”

Rumours emerged in the stock market late on Friday that Danone had talked to analysts to ask them to take the negative impact of the legal dispute with Wahaha into account in their earnings forecasts. The company’s shares closed 3.4 percent lower.

“In the context of discussions with analysts last week... Danone addressed questions regarding the Wahaha business in China. In these discussions, we did not provide any warning whatsoever on first-half results,” the email said.

Danone and Wahaha have exchanged lawsuits and arbitration claims in recent months in disputes over their China joint ventures.

Danone filed a lawsuit in California this year accusing Wahaha of breach of contract by using the Wahaha brand on products sold outside their joint ventures.

Wahaha has sought arbitration in China, asking to terminate a trademark transfer contract signed between Wahaha Group and a joint venture of Wahaha and Danone in 1996.

((Reporting by Marie Maitre

Editing by Andrew Callus; Reuters messaging:

rm://marie.maitre.reuters.com@reuters.net

Email: marie.maitre@reuters.com

Telephone: +33 1 4949 5331)) Keywords: DANONE GUIDANCE/

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