Royal Numico assesses impact of Java earthquake

By Anthony Fletcher

- Last updated on GMT

Related tags Baby food

Royal Numico reported today that the earthquake that struck the
island of Java at the weekend has significantly affected its
Indonesian baby food operations.

The Dutch infant nutrition giant said that its plants at Sari Husada have been badly damaged and will be out of action for two to three months.

A detailed safety and damage assessment has already been completed at Sari Husada's two baby food manufacturing plants. However, the company said that consumers would be able to buy Sari Husada's SGM products for the next eight weeks.

For any period thereafter, Numico said it would explore all internal and external sourcing options to limit the effect of this disruption on its Indonesian consumers.

The earthquake is one of the worst natural catastrophes to have hit the Indonesian island, and Numico is one of hundreds of businesses to have been affected.

The country's president warned this week that it could take months to deal with the estimated 200,000 people left without shelter after the 6.3-magnitude quake struck on Saturday. At least 5,400 people have been killed.

Yogyakarta, the nearest city to the epicentre, escaped largely unscathed. But the destruction to surrounding villages has been horrendous. In some places there was almost complete devastation.

For Numico, the repair and start-up costs, the write-down of raw materials and other related costs will be between €15 to 20 million (net of insurance coverage).

This will be taken in the second and third quarter of 2006. The loss of sales in the second quarter related to plant repairs is estimated to be around € 8m, with all efforts being made for a quick return to routine sales and operations in the third quarter of 2006.

"Our first concern is for our people, their families and the community,"​ said Numico chief executive Jan Bennink.

"The management of Sari Husada quickly set up an emergency centre to offer aid to the injured employees and their families, as well as to provide assistance to those who have suffered loss of homes and belongings. I am proud of the speed and spirit of their first response and their commitment to Sari Husada's employees."

Numico has been increasingly exploring new markets. Acquisitions in Asia and southern Europe helped Europes largest infant nutrition firm to record a first quarter profit rise of 43.5 per cent in April.

Dumex, which was bought last year from Danish EAC Nutrition last year, is the leading baby food business in Asia-Pacific.

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