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Heinz profit declines as expenses offset sales growth

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PITTSBURGH (AP) _ H.J. Heinz Co., the maker of Heinz ketchup, Ore-Ida french fries and Classico sauces, reported Monday that its first-quarter profit fell 19 percent as higher expenses offset sales growth. But its results excluding items beat Wall Street expectations and its shares rose in morning trading.

Heinz said its profit declined to $157.3 million, or 45 cents per share, for the three months ended July 27 from $194.8 million, or 55 cents per share, a year earlier.

Excluding $24.5 million, or 7 cents per share, in reorganization charges and costs from strategic reviews for the potential sale of noncore businesses, the company earned 52 cents per share, down from 55 cents per share a year ago.

Sales rose 5 percent to $2.11 billion from $2 billion last year, led by 11 percent volume growth in its North American consumer products segment.

Analysts surveyed by Thomson Financial expected earnings of 49 cents per share on sales of $2.08 billion.

Its shares rose 40 cents, or 1.1 percent, to $36.70 in morning trading on the New York Stock Exchange. Heinz shares have traded in a 52-week range of $34.53 to $40.61.

Heinz reported selling, general and administrative expenses rose 18 percent to $472.5 million, while product sale costs climbed 7 percent to $1.36 billion.

The company, which said the results were in line with its expectations, said it expects fiscal 2006 expenses of about $100 million for its reorganization and portfolio reviews, plus costs to integrate acquisitions.

``We are still tracking to our full-year outlook despite increased commodity cost pressures and a stronger U.S. dollar,'' said Chairman, President and Chief Executive William R. Johnson in a statement. ``We expect operating profit to strengthen through the balance of the year.''

The company's latest quarter was helped by a lower tax rate of 27.9 percent excluding items. Heinz said it expects a full-year 2006 tax rate of 31 percent to 33 percent.
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