NORTHFIELD, ILL. — Operating income of the U.S. Snacks business of Kraft Foods Inc. in the second quarter ended June 30 was $205 million, down 8% from $222 million in the second quarter last year. Sales were $1,288 million, up 1.3% from $1,272 million.

Accounting for the $17 million decline in operating income was a $40 million drop in realized gains on certain commodity hedging activities, the company said.

"Excluding these prior year gains, operating income increased as lower overhead and marketing costs, favorable volume/mix and higher price levels more than offset higher input costs," Kraft said.

Both higher prices and improved volume/mix accounted for the 1.3% gain in revenues. Cookie sales were up 5% in the second quarter from last year, with strong performances by the company’s top five brands — Oreo, Chips Ahoy!, Ritz, Wheat Thins and Triscuit. Holding sales back were declines for nuts and bars.

Other grain-based foods brands at Kraft performed well in the second quarter. DiGiorno pizza grew 20% or more, and new products, such as DiGiorno crispy flatbread pizza and DiGiorno and California Pizza Kitchen flatbread melts sandwiches helped fuel growth in U.S. Convenient Meals.

U.S. Grocery business was bolstered by double-digit volume growth in Kraft macaroni and cheese.

Net income of Kraft Foods Inc. in the second quarter ended June 30 was $829 million, equal to 56c per share on the common stock, up 27% from $747 million, or 44c per share, in the second quarter of 2008. Net sales were $10,162 million, down 6%.

For the six months ended June 30, Kraft net income was $1,491 million, or $1.01 per share, up 11% from $1,348 million, or 80c per share. Sales were $19,558 million, down 6%.

Revising the outlook for 2009 earnings per share, the company issued guidance of at least $1.93, up from $1.88.

"The investments we’ve made over the past three years are driving solid business momentum in a challenging economic environment," said Irene Rosenfeld, chairman and chief executive officer. "We’re on track to deliver strong top- and bottom-line results, restore our profit margins to industry averages and consistently deliver against our long-term earnings growth target of 7% to 9%."