Chinas Mengniu dairy returns to profit

China’s biggest maker of liquid milk has returned to profit following the melamine scandal that involved tainted dairy products in 2008. China Mengniu Dairy saw its net income increase to 1.1 billion yuan (EUR131 million), compared with a loss of 948.6 million yuan (EUR112.8m) a year earlier.
The dairy company’s profit dropped in 2008 after melamine contamination of milk products in China that year was linked to the deaths of at least six infants and the sickening of 300,000 more. Mengniu was among 22 dairy companies found to have sold products containing the toxic chemical, used to make plastics.
Dairy sales in China have almost returned to pre-scandal levels, according to chief financial officer Wu Jingshui. “The China dairy industry experienced a full recovery and growth in 2009,” Wu says.
The company’s first-quarter sales were in line with Mengniu’s growth expectations, he adds. Mengniu’s capital spending last year was 670 million yuan (EUR79m). Sales from liquid milk, which accounts for 88% of total revenue in 2009, rose 7.9% to 22.7 billion yuan. Sales of UHT milk products rose 3.6% to 14.2 billion yuan, while revenue from milk beverages rose 14.2% to 6.4 billion yuan.