One of the Chinese dairy companies implicated in the melamine contamination scandal says it lost millions in sales, refunds and recalls.
The Bright Dairy & Food Co., Ltd, traded in Shanghai, reported Thursday its losses and added costs by the end of Sept. amounted to 344.59 million yuan (about 50 million U.S. dollars).
"The melamine incident threw the whole dairy industry into a difficult situation and has caused rather big impacts on the company," said Bright Dairy.
The company's third-quarter net loss was 271 million yuan, compared to 390 million yuan in profits from the same quarter a year earlier.
It expects to post full year losses this year, compared to 212.88 million yuan in profits in 2007, the report said.
Melamine is a chemical used to make plastics. It was found in dairy products including baby formula made in China. It has been linked to at least three deaths and caused 54,000 babies to get sick with kidney stones.
By Wednesday, 2,390 babies were still in hospital, one in critical condition, according to the Ministry of Health.
The Chinese dairies, which include Bright Dairy, said melamine was added by middlemen to watered-down raw milk at collection stations to make it appear high in protein. At least 42 people have been arrested for making or dealing the illegal additive.
Yili and Mengniu, two industry leaders, have yet to publish their Q3 reports, but executives of both companies said whole-year losses are in sight.
"We have recalled all dairy products made before Sept. 14, according to the state order, and that amount alone has cost the company several billion yuan," Mengniu executive Yang Wenjun told Xinhua on Thursday.
Sales of Mengniu and Yili plummeted by more than 90 percent in the first few days after the scandal went public. Although the market has been gradually climbing back up, the dairies are still stuck in a crisis, Yang said.
"The problem products have brought the whole industry to a standstill. We have been learning the lessons and paying the prices we had to pay," said Yili chief executive Zhang Jianqiu. "We are doing a lot to correct ourselves and trying to pull the industry back on track as early as possible."
The major dairies said thousands of their employees are working at milk stations checking quality. The companies produced new advertisements, took the public and media on tours of their production facilities and offered discounts in an attempt to boost fledging sales.
(Xinhua News Agency October 30, 2008)
