Danone said net profit came to euro656 million (US$896 million) in the six months through June. In the same period a year earlier, the company reported a net profit of euro704 million boosted by a euro152 million (US$207.62 million) capital gain on the sale of Amoy sauces in Asia.

First-half revenue rose 9.2 percent to euro6.5 billion (US$8.75 billion). Underlying net income rose 8 percent to euro663 million (US$905.59 million) as the sale of health food yoghurts Actimel and Activa boosted results in the dairy division.

"A very good top-line impacted by declining sales of Wahaha," Chief Financial Officer Antoine Giscard d'Estaing said in a conference call with analysts.

In a statement, Danone said legal proceedings concerning the fight with its Chinese joint venture partner are continuing.

"Their outcome and their impact on the group's future financial statements cannot be precisely evaluated," the Paris-based company said.

Despite this uncertainty, Danone said its full year objectives are unchanged: like-for-like sales growth of 6 percent to 8 percent.

Danone accuses Wahaha of illegally selling products identical to those sold by the companies' joint ventures. The French company has filed a lawsuit in Los Angeles seeking more than US$100 million (euro73.4 million) for the alleged illegal sales and has also filed for arbitration in Stockholm to help resolve the dispute.

Chinese multimillionaire Zong Qinghou responded to Danone's action by resigning from the chairmanship of the Wahaha joint venture, and accused board members of Paris-based Danone of slandering and bullying him. Hangzhou Wahaha Group also filed for arbitration with the Hangzhou Arbitration Commission to resolve its dispute with Danone over the Wahaha brand.

The dispute will cut the Chinese joint venture's sales by one-third, said Emmanuel Faber, who heads Danone's Asia-Pacific operations.

Danone will be "as patient as it takes" to reach a solution, he said.

Meanwhile, Danone is undergoing a major transformation as it remodels itself as a health food company. It is selling its core biscuits division to U.S. snacks company Kraft Foods Inc. for euro5.3 billion (US$7.24 billion) and buying the Dutch nutrition company Numico NV for euro12.3 billion (US$16.8 billion).

The company did not break out figures for the second quarter, but it did give guidance on the evolution of its different business lines and regions over the period.

In the second quarter, Asian sales fell 5.6 percent as the Chinese dispute weighed on revenue. European sales gained 7.8 percent.

Dairy products showed the strongest growth, up 11.2 percent in the quarter.

Danone shares closed up 0.53 percent at euro54.39 (US$74.29). The stock has shed almost 6 percent this year on investor concerns about the Wahaha dispute.