Mercury-tainted products may hit Yili revenue

BEIJING - It has been forecast that the revenue of the Inner Mongolia Yili Industrial Group Co, one of China's leading dairy companies, will slow to 9 percent this year after excessive amounts of mercury were found recently in its baby formula products.

The China Merchants Securities Co Ltd (CMS) predicted that the company's revenue growth this year will shrink from 26 percent registered in 2011; meanwhile, profit growth will also slow from last year's 133-percent surge in the aftermath of the latest dairy safety incident to hit China.

The nation's top consumer quality watchdog said on Thursday that the mercury, a metallic element that is toxic in high doses, was detected in several batches of Yili products during a check of baby formula products.

The company also announced Thursday that it had started recalling the defective products on Wednesday, adding all of its other products were found to have normal mercury levels and it will find the cause of the contamination and properly handle all tainted products.

Food experts said the excess mercury could have been caused by several factors, including the environment, water and animal feeds, according to a report in the weekend edition of the China Securities Journal, a daily newspaper published by the Xinhua News Agency.

Meanwhile, the excessive level of mercury could be from the company's imported whey powder, which is the main ingredient in making baby formula products, the newspaper cited the CMS as saying.

Although the company faces only limited costs stemming from the recall as the involved products only accounted for a small part of its portfolio, the recall will nevertheless dampen consumer confidence in the company, the report said.