Aug. 31 (Bloomberg) -- H.J. Heinz Co., under pressure from billionaire investor Nelson Peltz to improve profits, said first-quarter earnings beat analysts' estimates on sales of new products including Smart Ones frozen meals and a lower tax rate.

Net income climbed 23 percent to $194.1 million, or 58 cents a share, from $157.3 million, or 45 cents, a year earlier, Pittsburgh-based Heinz said today in a statement. The company also reiterated its full-year earnings forecast.

Sales increased 8.4 percent, helped by new Classico pasta sauce flavors and Plasmon baby food. Chief Executive Officer William Johnson began implementing the company's plan to reduce spending and trim jobs as Peltz waged a proxy fight to push for cost cuts and increase the company's share price.

``Ever since Mr. Peltz has emerged they have been much more cognizant of shareholders,'' said Peter Jankovskis, research director at Oakbrook Investments, which manages about $932 million, including 120,000 Heinz shares.

Shareholders on Aug. 16 may have elected some of Peltz's minority slate of five candidates to the 12-member board, both the company and Peltz have said. Heinz, the world's largest ketchup maker, said today that complete results won't be available until the middle of September.

Sales for the three months ending Aug. 2 increased to $2.06 billion from $1.9 billion a year earlier. The company's tax rate declined to 20.3 percent from 28.3 percent.

Share Performance

The 137-year-old Heinz sells products ranging from chili sauce to Ore Ida fries in more than 200 countries. Its shares fell 14 cents to $41.84 at 4:01 p.m. in New York Stock Exchange composite trading. They have risen 12 percent since March 2, the day before Peltz said he would nominate a slate.

Peltz urged the company to slash $575 million in costs, increase marketing and sell assets. Peltz, together with his Trian Fund Management Inc., is Heinz's second-largest shareholder with 5.5 percent of the company's stock.

``We believe the strong first-quarter performance and outlook for the year are clearly a result of the pressure applied by the Peltz proposal that altered the company's strategic plan for 2007,'' A.G. Edwards & Sons Inc. analyst Christopher Growe wrote in a note to investors today.

The St. Louis-based Growe, who has a ``hold'' on Heinz stock, also estimated the company gained 7 cents a share from the lower tax rate.

``The first quarter reflects a hell of a lot of hard work over a long period of time,'' Johnson told analysts today on a conference call.

Analysts' Estimates

Deutsche Bank Securities Inc. analyst Eric Katzman estimated profit of 57 cents a share for the first quarter. New York-based Katzman, is one of StarMine Corp.'s top-ranked Heinz analysts.

The average estimate of 12 analysts surveyed by Thomson Financial was 54 cents. Four analysts estimated average sales of $2.05 billion for the quarter. Thomson doesn't disclose the basis of its estimate to Bloomberg.

``One quarter does not make a trend,'' said Matthew Kaufler, who helps manage $2.5 billion at Rochester, New York- based Clover Capital Management, including Heinz shares. ``They really need to stitch together several quarters before they start getting the credit they feel they deserve.''

Heinz said it should have ``10 percent plus'' profit growth for the year ending in April 2007 and reiterated sales growth of as much as 4 percent. In June, the company said it would achieve 10 percent growth, or $2.35 a share. Analysts surveyed by Thomson are expecting $2.33 on average.

Company's Plans

Johnson, 57, is focusing Heinz on its sauces, frozen meals and infant-nutrition businesses and selling slower-growing units in Europe, where Heinz is losing market share to private-label brands.

In June the company said it would reduce spending by $355 million, close 15 factories and cut 2,700 jobs. The company also plans to increase marketing spending this year by 19 percent to $317 million and introduce more than 100 new products.

Heinz, like competitors, is being hurt by increased commodity costs for oil and fructose. Expenses are running higher than planned for the year, Chief Financial Officer Art Winkleblack said.

Heinz increased sales in North America by 13 percent to $615.6 million on demand for Weight Watchers meals, Classico pasta sauces and T.G.I. Friday's frozen snacks.

U.S. retail ketchup volume, or units sold, declined 2 percent as the company reduced discounts and began promoting a larger, more profitable bottle.

Europe Sales

Sales in Europe advanced 6.8 percent in the quarter to $685.9 million as volume rose 2.2 percent, helped by ketchup sales to new customers, including McDonald's Corp., the company said.

The company has said the proposed job cuts represent 8 percent of its workforce and it is evaluating closing or selling five additional plants in 2008. As of Aug. 9, Heinz had completed the sale of six of the 15 factories it plans to exit.

Heinz is seeking to add two independent directors with consumer marketing and capital markets expertise to its board. The company will announce the additions ``well after'' the proxy results, it said.

To contact the reporter on this story: Josh Fineman in New York at jfineman@bloomberg.net.

Last Updated: August 31, 2006 17:20 EDT