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FRANCE: Wahaha hits Danone HY results

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Danone has posted a slip in group net profit for the first six months of 2007.

The French food and drink company said yesterday (30 July) that net profit for the period was down by 7% to EUR656m (US$896m), while sales were up 9.2% to EUR6.5bn.

For the first half of this year, the company's beverages unit saw sales slow somewhat, primarily due to the ongoing dispute in China at Wahaha. Beverage sales for the six-month period were up by 4.7% to EUR2.14bn. Excluding the results of Wahaha, where sales dropped by 6% in H1, beverage activity grew by nearly 10%. Europe grew in mid single-digits, with balanced growth rates in most geographies. Latin America grew at over 20% supported by strong growth of flavored waters in Argentina.

In the results statement, Danone said it was continuing discussions with its partner in Wahaha, Hangzhou Wahaha. "Their outcome and their impact on the group's future financial statements cannot be precisely evaluated," the company noted. Danone has accused Wahaha of illegally selling products identical to those sold by the companies' joint ventures in China. Danone has filed a suit in Los Angeles seeking more than US$100m in compensation for the alleged illegal sales and has also filed for arbitration in Stockholm to help resolve the dispute. Hangzhou Wahaha, meanwhile, has countersued Danone, claiming the French company is complicit in also competing with the joint ventures.


Sectors: Soft drinks, Water

Companies: Wahaha, Groupe Danone

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