UPDATE 2-Lower costs aid American Greetings' results, shrs soar

* Q1 EPS 25 cents

* Lower expenses help results

* Says made "significant" headcount reductions in Q4, Q1

* Stock up 41 pct, top percentage gainer on NYSE (Recasts; adds details, updates stock movement)

June 24 (Reuters) - Shares of American Greetings Corp (AM.N) soared 41 percent after the greetings card maker, which reported losses in the past two quarters weighed down by charges, posted a first-quarter profit on the back of lower expenses.

On a conference call with analysts, the company said it had made "significant" reductions in headcount in the past six months.

The second-largest U.S. greeting-card maker behind Hallmark Cards Inc said it expects margins to benefit from continued focus on reducing supply chain costs.

Selling, distribution and marketing expenses at American Greetings, which sells Carlton Cards and Plus Mark, fell 12 percent in the quarter.

The company, which has been grappling with the economic recession and weakness in certain lines such as gift packaging and party goods, said material, labor and other production costs declined 14 percent in the quarter.

For the first quarter ended May 29, American Greetings earned $10.0 million, or 25 cents a share, compared with $13.3 million, or 27 cents a share, a year ago.

It said the latest quarterly results include a previously announced non-cash loss of 44 cents a share on the disposition of certain assets.

Revenue dipped 4 percent to $409.3 million.

One analyst was expecting earnings of 20 cents a share, before special items, on revenue of $396.6 million, according to Reuters Estimates.

Shares of the Cleveland-based company, which have shed more than half their value from a 52-week high reached last September, were up $2.58 at $8.94 in midday trade. The stock was the top percentage gainer Wednesday on the New York Stock Exchange. (Reporting by Amitha Rajan in Bangalore; Editing by Anil D'Silva)