Fortune Brands today reported better than expected second quarter results by turning in net income for the period of US$200.3m, or US$1.33 per diluted share, up 20% versus $1.11 in the year-ago quarter.

Diluted EPS before charges/gains was US$1.45, up 13% from US$1.28. The result was one cent above the mean estimate of Wall Street securities analysts as net sales increased to US$2.07 billion, up 10%. The net impact of acquisitions, excise taxes and foreign exchange benefited sales by 2%, the company said in a statement.

"Share gains by many of our leading brands drove another quarter of broad-based success for Fortune Brands," said Fortune Brands chairman and CEO Norm Wesley. "The fact that Fortune Brands delivered double-digit growth in both sales and earnings above last year's strong results underscores the momentum we've built in the marketplace and the success of our strategy. Our brand-building investments, including successful new products and high-impact marketing, are helping create consumer demand. Supply-chain efficiencies combined with strong volumes are fueling earnings growth."

"As we look ahead to completing our major spirits and wine acquisition and the spin-off of our office products business, we're highly optimistic about our future as a more sharply-focused, high-performance consumer brands company."

In the quarter, the company recorded charges - partly offset by a tax-related credit - principally associated with its currency hedging program for the upcoming spirits and wine acquisition.

"When we first announced our spirits and wine acquisition, we estimated the purchase price would reach $5.3 billion at the prevailing exchange rates," Wesley added. "We are delighted that our hedging program both protected our downside and has enabled us to capitalize on the recent strengthening of the dollar. As a result, we'll save more than US$300m on the purchase, reducing our outlay at closing to approximately US$5.0 billion. We continue to expect that this acquisition will add between 25 and 35 cents to our earnings per share in 2006."

He continued: "As we look to the back half of the year, we feel good about our position in the marketplace. Because our spirits and wine acquisition has not yet closed, we do not yet have access to proprietary information on the brands we're purchasing, which we'll need to finalize a second-half forecast. At this point, we're assuming modest accretion from the new spirits and wine brands over the balance of the year as we begin the process of integrating the acquisition. We're targeting our continuing operations, including the new spirits and wine brands, to deliver double-digit growth in EPS before charges/gains for the third quarter and for the full year. It's important to note that our office products business will be considered a discontinued operation as of the third quarter and will no longer be reflected in our results."