Kraft Foods ( KFT) shares rose 2% Wednesday after the food giant's earnings beat forecasts, even though profits tumbled amid soaring costs.

For the third quarter, Kraft's earnings fell to $596 million, or 38 cents a share, from $748 million, or 45 cents a share, a year earlier.

The year-ago results were boosted by a gain on an asset sale, while current-quarter results included restructuring-related charges. But even excluding one-time items, earnings per share still fell to 44 cents from 46 cents.

Analysts, on average, expected earnings of 42 cents a share, before items.

Revenue rose 9.8% to $9.05 billion from $8.24 billion the prior year, exceeding Wall Street's forecast of $8.68 billion. Organic revenue, which excludes currency exchange and acquisitions, rose 6.2%.

Shares of Kraft recently were up 63 cents to $33.23.

The company, maker of goods such as Nabisco crackers and Oscar Mayer meats, said its bottom line was hit by higher costs and expenses from its investments in growth. As has been the case with many food companies, Kraft pointed to dairy costs, in particular, for hitting profits.

Kraft reiterated its full-year profit forecast of $1.80 to $1.82 a share, before items. Analysts expect 2007 earnings of $1.81 a share.

Including all items, Kraft still anticipates net income of $1.60 to $1.62 a share for the year.

The company lowered its planned spending on its ongoing restructuring program to $500 million, or 20 cents a share, from a previous forecast of $575 million, or 23 cents a share. But Kraft expects savings from the program to reach $775 million by year end, up from its prior projection of $725 million.