September 11, 2012

 

Bright Dairy's shares decline as firm recalls milk batches

 

 

Shares of China's Bright Dairy & Food Co Ltd decline more than 3% on September 10 after the firm announces the recalling of sour milk batches.

 

The situation reflects the latest blow to the country's scandal-tainted dairy industry which is struggling to restore consumer confidence.

 

Bright Dairy had received 952 customer complaints and it promptly dealt with demands to recall, replace or refund, according to customers' wishes, it said in a statement.

 

The stock fell to its lowest in three days, before closing down 2.4% at CNY9.07 (US$1.43), lagging a 0.3% gain in the Shanghai Composite.

 

Bright Dairy said the incident happened when storage temperatures during the delivery of fresh milk were not at the required levels, causing the milk to turn sour. It added it had reviewed its procedures to avoid the problem in the future.

 

It gave no further details on compensation.

 

The news came as China's Mengniu Dairy Company Ltd , the country's biggest dairy operator, sought to reassure buyers after a woman claimed she had found live worms in a carton of milk.

 

"All our production and packaging has to go through a technology process including filtering, separation, as well as sterilisation through high temperatures," Mengniu said in a blog on the company's website. "It's impossible for insects to survive such high temperatures."

 

Mengniu's shares were down 2% in Hong Kong, lagging a 0.3% gain in the benchmark index.

 

China's dairy industry has been struggling to restore consumer confidence after a series of scandals, the worst of which was in 2008 when milk laced with the industrial chemical melamine killed at least six children and affected nearly 300,000.

 

In July, China's Hunan Ava Dairy Co Ltd said it would recall baby formula sold under its Nanshan Bywise brand after a cancer-causing agent was found in test samples.

 

In June, China's biggest milk producer by revenue, Inner Mongolia Yili Industrial Group Co, recalled baby formula tainted with "unusual" levels of mercury.

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