Business

Kellogg's outlook suffers after axing 'too many jobs'

Kellogg's Corn Flakes
Image caption The firm is hiring staff to improve production of favourites including Corn Flakes

Cereal maker Kellogg's has announced a $70m (£43.6m) investment in its factories after too many job cuts undermined production standards.

The US firm is recruiting 300 US plant workers in a bid to improve quality.

John Bryant, Kellogg's chief executive officer, said the company "cut deeper than it should have" and is now hiring staff.

Kellogg's also unveiled profits of $290 million for the third quarter of 2011, down from $338 million a year earlier.

The move follows a worldwide cull of staff in 2009, which saw an estimated 1,500 employees lose their jobs.

Kellogg's shares fell 7.6% at $49.96 in New York.

'Significant violations'

The firm's products include Pop-Tarts and Nutri-Grain cereal bars, as well as Corn Flakes and Rice Krispies.

In June, U.S. regulators found listeria - a bacterium that causes serious food poisoning - at a Kellogg's biscuit-making plant in Georgia, and warned the company about "significant violations" of manufacturing regulations.

That incident followed a recall of millions of boxes of cereal in 2010 due to an unusual smell, and a recall of some Special K protein bars in 2009.

Analyst David Kolpak of Victory Capital Management said: "I am very surprised and disappointed.

"It's becoming clear that they have underinvested in the infrastructure of the company for some time.

"Now that underinvestment is coming back to bite them."