17 Oct 2013

Danone profits hit by botulism scare

10:33 am on 17 October 2013

Shares in the French food group Danone have fallen after a profit warning related to the Fonterra botulism scare.

Danone says the false alert, which prompted a recall of its products, is going to cost it US$379 million this year.

As a result of the recall its baby food sales fell 8.6% in the third quarter, reversing a 15.2% rise in the first half.

The company says it's taking longer than expected to recover from the scare, and as a result it has cut its sales, profitability and cash flow targets for the 2013 financial year.

Fonterra and Danone are in talks about how to settle a claim for compensation over the recall.