Chinese dairy company Bright Dairy & Food Co posted a net loss of CNY271.24m (US$40m) in the third quarter of this year, down from a profit of CNY39.06m last year.

Profits were hit by the cost of product recalls and a decline in demand in the wake of the melamine contamination scandal in which four babies died and thousands were hospitalised in China.

Operating revenue fell 11.28% year-on-year to CNY2.05bn, the company said in a filing with the Shanghai stock exchange.

Selling expenses rose 13.55% to CNY705.26m and management expenses rose 131.17% to CNY176.80m. Bright Dairy booked an impairment loss of CNY141.38m, up 6,764.41%.

In a separate statement, the company warned that it expects to see full year losses, compared with 2007's profit of CNY212.9m.