Kraft Foods

(KFT)

reported third-quarter results that it described as "mixed," as profits improved and revenue rose a modest 2.3%.

The food giant also raised its full-year guidance to reflect new one-time items related to its restructuring.

Kraft earned $748 million, or 45 cents a share, for the September quarter, up from $674 million, or 40 cents a share, a year earlier.

Excluding restructuring charges and gains and losses from asset sales, Kraft's earnings totaled 46 cents a share. Analysts polled by Thomson First Call expected a profit of 45 cents a share.

Kraft, a maker of products ranging from Oscar Mayer meats to Kool-Aid drinks, said revenue rose to $8.24 billion from $8.06 billion last year. Wall Street expected a top line of $8.26 billion.

Kraft, which has been in the midst of a broad restructuring for the past two years, said earnings were helped by higher gross margins, restructuring savings and share repurchases. Sales growth, meanwhile, was driven by strength in North American convenient meals, biscuits, powdered beverages, cheese and cereals as well as Latin America and Eastern Europe.

"Our third quarter results were mixed. Our restructuring efforts have enabled us to fund a number of successful initiatives in some key growth areas, including 'better-for-you' products, snacking and convenient meals," said Chief Executive Irene Rosenfeld in a statement. "However, while income growth was strong, our aggregate top-line growth is not where it needs to be. We must continue to invest to build our momentum and generate growth more broadly."

Kraft, which is majority owned by

Altria Group

(MO) - Get Report

, said it continues to make progress on its cost restructuring program. By the end of the third quarter, annualized ongoing savings for the program totaled about $465 million, up from roughly $260 million at the end of 2005.

The company said, however, that it now expects cumulative savings will reach $530 million by the end of 2006, down from a previous expectation of $560 million due to timing of activities. Kraft continues to expect that restructuring and other impairment charges will total approximately $1 billion for the year.

The company now sees 2006 earnings of $1.86 to $1.89 a share, up from its previous forecast of $1.78 to $1.83 a share. The change reflects a 9-cent gain from Kraft's sale of its interest in United Biscuits, down from a prior estimate of 13 cents, and a 10-cent fourth-quarter gain from the sale of its Minute Rice brand.

Kraft still expects organic revenue growth of 3% or more for the year.

Shares of the company were up 20 cents to $36.50 in after-hours trading.