Ketchup maker H.J. Heinz Co. (HNZ) posted a smaller-than-expected 4 percent rise in quarterly profit on Tuesday as higher raw material, commodity and fuel costs hurt results.

Heinz also forecast earnings for the year would be at the low end of its previous estimate and said it may have to write down its investment in organic food company Hain Celestial Group Inc. (HAIN), which could lead to a charge against earnings.

Net income rose to $199.0 million, or 56 cents a share, in the fiscal second quarter ended Oct. 27, from $191.5 million, or 54 cents a share, a year earlier, Pittsburgh-based Heinz said.

Analysts' average forecast was 59 cents a share, according to Reuters Estimates.

Sales rose to $2.20 billion from $2.09 billion, boosted by volume growth of Ore-Ida frozen potatoes (search) and Delimex snacks (search) in North America.

Heinz said it is still on track to earn $2.32 to $2.42 per share this year but expects results to come in toward the lower half of that range. Analysts' average forecast is $2.37 per share.

During a conference call, Chairman, President and Chief Executive William Johnson said earnings in the fiscal fourth quarter would be "significantly higher" than in the current third quarter.

Johnson forecast full-year sales growth of 2 percent to 3 percent and volume growth of 1 percent to 2 percent.

He also said Heinz expects higher costs for materials such as packaging and ingredients for the foreseeable future.

Shares of Heinz closed at $38.39 on Monday on the New York Stock Exchange.

Gross profit margin fell 1 percentage point in the second quarter to 36.4 percent due to issues such as raw material and production costs in the European seafood business, a $21.1 million charge for trade spending for the Italian infant nutrition business, and higher commodity and fuel costs, the company said.

Heinz said it owns about 6 million shares of Hain, or a stake of more than 16 percent, at an average basis of about $30 per share as of Oct. 27.

Shares of Melville, New York-based Hain closed at $19.17 on Monday, down from a 52-week high of $25 reached last December.

If Hain's stock market value remains at current levels, Heinz said it may need to write down its investment in Hain to market value before the end of fiscal 2005, in accordance with accounting rules. Any such write-down is not included in Heinz's earnings outlook.

Heinz said it is still optimistic about Hain's prospects.