Check out General Mills’s earnings.

The world’s second-biggest maker of breakfast cereals said quarterly profit rose 1 percent as more expensive marketing and a pizza recall dampened the the impact of higher sales of its products, which include Cheerios, Wheaties and Lucky Charms.

But more worrisome for investors are the company’s comments regarding its 2008 outlook for the cost of raw materials such as oil, grains and dairy products.

“The company expects input cost inflation will be higher in the second half than in the first half, and that full-year inflation will be greater than originally estimated,” the company said.

General Mills, which also makes Progresso soups, Pillsbury cookie dough and Yoplait yogurt, has raised the price per ounce of its cereal by using smaller boxes and has taken other measures to try to offset those costs, which have soared recently.

But the company said additional price increases, better-than-expected first-half results and productivity improvements should offset the cost pressure, leading it to affirm its profit outlook for the full year.

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(Photo: Reuters)