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Kellogg reported lower-than-expected quarterly profit and cut its full-year forecast, sending its shares down 4.7 percent, as a big cereal recall and sales promotions in that business took a toll.
The world's largest cereal maker also said lower Eggo waffle sales also pressured results.
"We have lowered our full-year guidance to reflect the cost of the recall and the difficult business environment," CEO David Mackay said. "However, we are anticipating a stronger back half, driven by increased innovation, reinvestment in our business and gradual improvement in category trends."
Last month, Kellogg recalled 28 million boxes of cereal from stores around the United States after about 20 people complained about a "waxy" smell and flavor coming from box liners.
Kellogg, which makes Pop-Tarts and Keebler cookies in addition to cereals like Corn Flakes and Froot Loops, said net income fell to $302 million, or 79 cents per share, in the second quarter, ended on July 3, from $354 million, or 92 cents per share, a year earlier.
Excluding the impact of the recall, earnings were 89 cents per share.
Analysts on average were expecting 94 cents, according to Thomson Reuters. It was not immediately clear whether analysts' estimates took into account the charge of 10 cents per share related to the recall.
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