Dairy firmturns profit after 2008 milk scandal
HONG KONG - China Mengniu Dairy Co, the nation's biggest maker of liquid milk, returned to profit in 2009 after sales and margins recovered from a nationwide scandal involving tainted dairy products the year before.
Net income was 1.1 billion yuan ($161 million) or 0.681 yuan a share, compared with a loss of 948.6 million yuan, or 0.639 yuan a share, a year earlier, Mengniu said in a filing to Hong Kong's stock exchange. That compared with an average profit estimate of 1.18 billion yuan by 14 analysts surveyed by Bloomberg. Sales rose 7.7 percent to 25.7 billion yuan.
Melamine contamination in 2008 killed at least six infants and sickened 300,000 in China after they drank tainted baby formula. Mengniu was among 22 dairy companies found to have sold products containing the toxic chemical, used to make plastics and found to be linked to kidney stones in infants.
"The China dairy industry experienced a full recovery and growth in 2009," Mengniu said on Wednesday. The industry "continued to implement stringent quality control procedures in concert with national laws and regulations and strived to ensure the safety of dairy products".
Mengniu fell 0.4 percent to HK$26.1 in Hong Kong on Tuesday. The stock has fallen 6 percent this year, compared with a 2.8 percent decline in the benchmark Hang Seng Index.
Sales from liquid milk, which accounts for 88 percent of total revenue, rose 7.9 percent to 22.7 billion yuan, Mengniu said. Sales of ultra-high-temperature, long-life milk products rose 3.6 percent to 14.2 billion yuan, while revenue from milk beverages rose 14.2 percent to 6.4 billion yuan.
Cofco (Hong Kong) Ltd, a unit of China's biggest grain trader, and Hopu Investment Management Co became the biggest stakeholders in Mengniu last year after they spent HK$6.12 billion ($788 million) for a 20 percent stake.
Mengniu proposed a final dividend of 0.1413 yuan a share, the statement said. It skipped a final dividend for 2008.
Bloomberg News
(China Daily 04/29/2010 page16)
