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H.J. Heinz Earnings Rise

The ketchup king beats estimates.
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Second-quarter earnings rose 3% from a year ago at

H.J. Heinz


, as a lower tax rate and $32 million of income from discontinued operations offset a reorganization charge.

Heinz earned $203.8 million, or 60 cents a share, in the latest quarter compared with $199.0 million, or 56 cents a share, a year ago. Backing out the discontinued operations and charge, the ketchup company earned $212 million, or 62 cents a share, beating estimates by 8 cents.

Sales rose 6.3% from a year ago to $2.34 billion, about $40 million ahead of estimates.

Heinz' effected tax rate for the quarter was 24.8% vs. 32.0% in the prior year. This decline was primarily due to the reversal of a tax provision related to a foreign affiliate. Heinz said its tax rate for the year will probably be 30% to 31%, down from 31% to 33%.

The company said its adjusted gross profit rose 5.6% in the latest second quarter from a year earlier, due primarily to the increased volume and favorable impact of acquisitions.

"Adjusted gross profit margins were off slightly, as a modest increase in net price and strong productivity initiatives largely offset increases in commodity and fuel costs. Adjusted operating income grew 5.2% despite the significant cost headwinds buffeting the industry. The increase in adjusted operating income and a lower effective tax rate offset increased net interest expense, resulting in the 10.7% increase in EPS," the company said.