US food company HJ Heinz has reported a sharp drop in quarterly earnings, hit by higher costs and special items.

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The company, famous for its Heinz Ketchup, posted earnings of US$102.6m, or 29 cents a share, for the fiscal fourth quarter to 30 April, after special items that reduced earnings by $82.2m. In the year-ago period, Heinz posted earnings of $223.5m, or 63 cents per share.

Excluding special items, such as costs related to the spin-off of some underperforming brands in December, Heinz reported profit from continuing operations of 52 cents a share, unchanged from the year-ago value. Analysts polled by Thomson First Call had been expecting on average 53 cents a share, reported Reuters.

Fourth-quarter sales from continuing operations were up 6% to $2.19bn, helped by strong international results.

Heinz said increased prices in North America offset lower volume in some US frozen food brands.

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The company said it has targeted earnings of between $2.15 and $2.25 a share for fiscal 2004 and net sales growth of 3-4% excluding divested businesses.

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