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Snow Brand Milk Products Co. said Friday it posted a group net loss of 45.36 billion yen for the first half of this business year, due largely to hefty restructuring charges aimed at reviving the ailing dairy giant.

The firm logged a group net loss of 13.66 billion yen in the first half of 2001.

The scandal-tainted firm said its group sales for the six-month period through Sept. 30 dropped 13.9 percent to 535.2 billion yen on a year-on-year basis. Its group operating loss came to 11.63 billion yen, against the operating loss of 15.51 billion yen recorded a year ago.

The Snow Brand group was hit hard in 2000 by a food-poisoning scandal involving milk products made by the parent company. It suffered further damage earlier this year from a beef-mislabeling scandal involving subsidiary Snow Brand Foods Co.

The mislabeling scam led to liquidation of the subsidiary on April 30.

In announcing its half-year earnings report, Snow Brand emphasized the progress of its rigorous cost-cutting efforts, stating that it has managed to narrow its operating loss from a year earlier despite falling revenues.

On a parent-only basis, the firm cut 912 employees, or 20 percent of the total workforce, from its payroll by September. But restructuring costs weighed heavily on the company, which booked a special charge of 45.47 billion yen in the first half.

Under a rehabilitation plan announced in May, the firm plans to return to profitability in 2003 and eliminate its accumulated losses by the end of 2005.

To this end, Snow Brand has started spinning off its noncore operations, with the remaining firm set to focus on dairy products.

Among those scheduled to be spun off is Snow Brand’s milk unit, which will be consolidated under a new company, Nippon Milk Community Co., in January. The new company will be jointly established with the National Federation of Agricultural Cooperative Associations (Zen-Noh) and the National Federation of Dairy Cooperative Associations (Zenrakuren).

The firm has also secured agreements from its creditor banks, including Norinchukin Bank, over the provision of 50 billion yen in financial aid through debt waivers and a debt-for-equity swap, to be carried out in February.

Meanwhile, the firm’s sales of dairy products have regained lost ground, with Snow Brand having reclaimed the top share of the domestic market since late spring.

Snow Brand’s share of the butter market reportedly stood at 40.1 percent in October, while its share of the margarine market stood at 41.6 percent.

“We have top shares in terms of figures, but we don’t think that means we have regained consumers’ trust,” Snow Brand President Tadaaki Konose said. “There are those who still have a strong aversion to our products. Some people don’t even want to see the Snow Brand (logos).”

Indeed, Snow Brand’s milk sales are still suffering fallout from the poisoning episode two years ago, with its market share standing at 4.2 percent, less than a third of that recorded before the outbreak.

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