Dairy company sees sales decline for quality

China Mengniu Dairy Co attributed the company’s profit decline and sales drop in the first half of the year to poor quality and safety-related media reports.

The company reported sales revenue of 13.86 billion yuan ($2.18 billion) for the first sixth months of 2012. Net profit for the period was 644.7 million yuan, an 18 percent decrease over the same time period in 2011, according to the report.

Mengniu attributed the decrease in net profits to the economic slowdown in China as well as the dairy industry, the company spokesman said at Tuesday’s news conference.

At the end of 2011, several scandals related to the quality of Mengniu products affected sales volumes, the company said.

In December 2011, the General Administration of Quality Supervision, Inspection and Quarantine said the cancer-causing flavacin M1 was discovered in a batch of boxed milk produced at the company’s plant in Meishan, Sichuan province, during a routine inspection.

As a result, the sales volume of Mengniu plunged 30 percent, Sun Yiping, chief executive officer at Mengniu, said on Tuesday.

On Aug 6, a sales manager at Mengniu was detained on suspicion of tampering with the production dates on 5,000 boxes of milk and yogurt in East China’s Zhejiang province.

Mengniu compensated all of the consumers involved in the case in Zhejiang province and will enhance quality control in the sales process this year, Sun Yiping was quoted as saying by Xinhua News Agency on Tuesday.