On the call: Kellogg CEO David Mackay

By The Associated Press

Kellogg Co. reported its second-quarter results Thursday, saying a major cereal recall and soft sales dragged its net income down 15 percent.

The company recalled 28 million boxes of popular cereals last month after some consumers complained that the boxes had an unusual smell and flavor, which the company blamed on a chemical in the boxes' liners. Kellogg blamed a supplier, which it would not name, for the problem, which cut its profit by 10 cents per share for the quarter.

Kellogg CEO David Mackay discusses the larger impact on its brands during a conference call with investors on Thursday.

QUESTION: I think (the impact of the recall) was probably a lot greater than most people were expecting. And I'm just kind of worried to the extent that the recall has a brand equity impact. I mean, sometimes these things are short term and the consumer comes right back. But are you seeing ... any lingering impact in terms of consumption on some of the core brands where the recall was greatest?

RESPONSE: For the three or four weeks for the quarter, mainly through July, we will see an impact because in some retailers we pulled all of the stock. And it's going back in. There just wasn't the availability.

So we've seen that in the first week of data through July on those affected brands. But because we acted so responsibly, I believe, and voluntarily withdrew all of the product, I don't believe there will be a long-term impact on those very strong (brand) equities.