UPDATE 2-Diamond Foods adjusted profit tops estimates
* Adjusted EPS of 24 cts tops analysts' view of 23 cts
* Company still trying to get past an accounting scandal
* Shares rise 1 pct in after-hours trade
Dec 17 (Reuters) - Diamond Foods reported slightly better than expected adjusted profit for the first quarter on Monday, as reduced spending on promotions and advertising helped margins, and the snack food maker's shares rose 1 percent in after-hours trade.
Diamond is trying to get past an accounting scandal that claimed the jobs of two top managers and caused its planned purchase of Pringles to fall apart. The scandal, involving improper accounting of payments to walnut farmers, also led to the restatement of financial results that wiped out $56.5 million in profit from fiscal 2010 and 2011.
The scandal led many farmers to back away from Diamond, affecting its ability to operate. In the latest quarter, its nonretail business, which includes bulk sales of nuts, fell 57 percent because of inadequate nut supply.
On the retail side, sales fell 4 percent. Declines in its Emerald Nuts and Kettle chips were only partially offset by an increase for Pop Secret popcorn.
"Our first-quarter results reflect some progress against our new brand strategies, but we continue to face headwinds with respect to walnut supply and a highly leveraged balance sheet," said Diamond Chief Executive Brian Driscoll.
The company has cash and a revolving credit line of $95 million and net debt of $596.9 million.
On a net basis, the maker of Emerald nuts and Kettle chips lost $10.7 million, or 49 cents per share, in its fiscal first quarter, ended on Oct. 31, compared with earnings of $10.8 million, or 47 cents per share, a year earlier.
Excluding charges of $11.8 million from the investigation and $7.5 million related to a change in the fair value of a warrant liability held by Oaktree Capital, it earned 24 cents per share.
On that basis, analysts on average were expecting 23 cents per share, according to Thomson Reuters I/B/E/S.
The company cited reduced promotional spending on its snack brands and a shift in the timing of advertising spending to later in the year.
Net sales fell 10 percent to $258.5 million.
Diamond shares were up 1.1 percent at $14.12 in after-hours trading compared with their close on the Nasdaq at $13.96.