December 24, 2008

China's Mengniu expects RMB900 million loss for 2008

China's Mengniu Dairy Co. expects to post a loss of RMB900 million (US$131.4 million) for this year, largely due to the melamine-tainted milk scandal.

The milk scandal kicked sales down as much as 96 percent, forcing Mengniu to write off inventories, increase raw milk disposal and sales promotional costs, according to the company.

China's dairy industry was hit hard after 22 milk producers, including Mengniu, was found to have sold melamine-tainted milk and milk products.

Mengniu is seeking opportunities to strengthen its financial position, and has swore to improve milk quality to prevent a repeat of such a scandal, the company said.

Melamine is an industrial chemical added to diluted raw milk to enhance nitrogen level, which will give the false impression of high protein content, as nitrogen is tested for protein.