Perrier Recall Causes Profit to Plummet 75% for 1989

Source Perrier SA said Friday that the costs associated with the recent recall of its popular bottled sparkling water were assessed to last year’s account, resulting in a 75% plunge in earnings for 1989.

The company said net profit totaled $47 million for the year, compared to $185 million in 1988.

Perrier recalled its bottled water worldwide in February after tests showed traces of benzene, a cancer-causing chemical, in its product in several countries. The contamination came from improper infiltration of carbon dioxide gas added to the water, according to the company.

Perrier put the cost of the recall at $78 million.

The company said it put aside part of its 1989 profit to cover the recall expense, which is permitted under French law.

Perrier said it had expected to cover most of the recall costs with nonrecurring gains from the sale of assets, but these totaled only $45 million for 1989.

In addition, Perrier’s 1988 results were boosted by much more substantial nonrecurring gains of $154 million, reflecting the sale of assets that included television, confectionary and milk interests.

Perrier recently began resupplying its distributors with bottles marked “Nouvelle (New) Production.”