Aventis Says Cost of StarLink Recall Will Be Lower Than Original Reports
Wall Street Journal 9nov00
Corn-Recall Cost Could Reach Into the Hundreds of Millions (Nov. 3)
Biotech-Corn Problems Lead to Recall of 300 Products, Disrupt Farm Belt (Nov. 2)
Federal Officials Blame Aventis For Biotech Corn Found in Food (Oct. 27)
Aventis Agrees to Pay for U.S. to Purchase Modified Corn (Oct. 2)
Taco Shells Are Studied for Trace of Biotech Corn (Sept. 19)
PARIS -- Aventis CropScience, the agrochemicals unit of life-sciences company Aventis SA, said Thursday that the financial impact of the recall of StarLink genetically modified corn in the U.S. will be significantly lower than the $1 billion recently reported in the press.
Separately, Aventis SA said its net profit in the third quarter fell 41% from a year earlier, as a result of a number of one-time items, most of which are attributable to the restructuring costs caused by the merger of France's Rhone-Poulenc SA and Germany's Hoechst AG to form Aventis.
StarLink, approved by the Environmental Protection Agency only for animal feed use, was recently found in human-food products, such as taco shells, in the U.S.
It had been estimated that Aventis could spend up to $1 billion to buy the StarLink crop back from growers.
Last week, Aventis officials said they expect some legal wrangling over responsibility for unauthorized uses of StarLink corn. Government officials have said Aventis failed to make sure that the corn was grown with buffers that would prevent cross-pollination and other restrictions that were conditions of StarLink's approval. Aventis officials insist that seed companies licensed to incorporate the corn into their own products were responsible for notifying farmers about the restrictions.
Either way, the company said the financial impact of the recall wouldn't reach the level originally estimated.
"It is Aventis CropScience's best judgment at this stage that the net financial impact of Starlink will be significantly below the highly speculative figures reported in the press," the company said.
The company also stressed that, although the corn was grown and distributed by third parties, Aventis CropScience has taken the initial corrective actions. As a result, the company is assessing the degree of shared responsibility of the different companies, as well as insurance coverage for such costs.
Meanwhile, Aventis said third-quarter net profit slipped to 126 million euros ($107.8 million) from 212 million euros a year earlier. But net profit before exceptional items rose 23% to 314 million euros from 256 million euros.
Net profit in the first nine months was 463 million euros, up 8.4% from 427 million euros. Excluding one-time items, nine-month net profit rose 46% to 947 million euros from 648 million euros.
Nine-month operating profit fell to 1.78 billion euros from 1.99 billion euros a year earlier.
Aventis said restructuring charges in the first nine months of this year were 839 million euros. The balance of the total 1.3 billion euros charges -- 461 million euros -- will be accounted for in its fourth quarter results.
Chief Financial Officer Patrick Langlois said the company's growth was due to a strong rise in pharmaceutical sales, including antithrombotic drug Lovenox, cancer drug Taxotere and nonsedating antihistamine Allegra.
For the full year, Aventis has revised upward its growth forecasts for earnings per share before exceptional items, to 40% from the 25% announced at the beginning of this year.
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