BATTLE CREEK, Mich. (AP) -- Kellogg is cutting its earnings forecast for the year again because of fallout from a cereal recall and soft sales of some cereal brands.
The maker of Frosted Mini-Wheats, Special K and other brands said Thursday that it now anticipates 2010 earnings per share to rise between 4 percent and 5 percent.
Its shares fell $1.06, or 2.2 percnt, to $48.96 in pre-market trading.
Its initial guidance was for earnings to climb 11 percent to 13 percent, but this was lowered in July to an anticipated rise of 8 percent to 10 percent.
Kellogg recalled 28 million boxes of Apple Jacks, Corn Pops, Froot Loops and Honey Smacks cereal in June after about 20 people complained that the boxes had an unusual smell and flavor, which the company blamed on a chemical in the boxes' liners.
The company later identified elevated levels of chemicals in the liner as the cause and said in July that it was a supplier issue. Kellogg also said at that time that it expected the recall would continue to take its toll at an estimated 12 cents per share of profit for the full-year.
While Kellogg did not specify which cereal brands were hurting the most, the company reported in July that cereal revenue dropped in the second quarter as it struggled with increased promotions at retailers that cut prices and tougher competition from companies such as Ralcorp's Post Brands.
Kellogg Co. predicts third-quarter earnings per share excluding currency effects will be down about 2 percent, with revenue likely dropping 4 percent. The company based in Battle Creek, Mich., will report its quarterly results on Nov. 2.
CEO David Mackay said in a statement that 2010 has clearly been a challenging year, and the company is disappointed with its third-quarter performance.
Kellogg's other brands include Keebler, Pop-Tarts, Eggo, Cheez-It, Rice Krispies, Famous Amos and Kashi.
Published: Fri, Oct 22, 2010
