May 21 (Bloomberg) -- Campbell Soup Co. said third-quarter profit rose more than analysts estimated after record spending on soup advertising spurred sales of lower-salt varieties and organic broths that commanded higher prices.

The company also increased its full-year profit forecast.

Net income at the world's largest soupmaker increased 31 percent to $217 million, or 55 cents a share, from $166 million, or 40 cents, a year earlier. Sales advanced 8.1 percent to $1.87 billion, the biggest gain in 10 quarters, helped by V8 juices.

An 18 percent jump in advertising spending drove demand for Cream of Mushroom and other varieties with less sodium and higher prices, lifting U.S. soup sales 10 percent. Campbell catered to harried consumers with more soups that were ready-to- eat and packaged in microwaveable containers.

``Beyond the momentum in the soup business, we saw sales advance at nearly every other business,'' Christopher Growe, an A.G. Edwards & Sons Inc. analyst in St. Louis, wrote in a note today. He has a ``hold'' rating on Campbell stock.

Shares of Campbell, which also makes Godiva chocolates, Pepperidge Farm breads and Arnott's crackers, closed unchanged at $39.50 as of 4:01 p.m. in New York Stock Exchange composite trading. They gained 31 percent in 2006, the biggest advance in nine years.

Two one-time gains, including one related to litigation, added 9 cents to profit. Excluding those items, the company said it earned 45 cents a share.

Estimates

Analysts had estimated profit of 41 cents a share, the average of 16 projections compiled by Bloomberg. A year earlier, earnings rose 14 percent on higher soup and beverage prices.

The company, based in Camden, New Jersey, raised its full- year earnings forecast to $1.94 to $1.97 a share, compared with the average analyst' estimate of $1.96. It had previously forecast $1.90 to $1.94 a share.

Increased advertising of soups, V8 juices and Goldfish crackers in the U.S. pushed marketing and selling costs up 18 percent to $336 million.

The company spent the most ever in the third quarter marketing soups in the U.S., Chief Executive Officer Douglas Conant said in an interview.

``We moved up to record levels of marketing spending,'' Conant said. ``We expect to continue that in the fourth quarter.''

Repeat Purchases

Campbell said consumers made repeat purchases of its reduced-salt soups at a higher level than it had expected. Sales of condensed soups such as tomato and chicken noodle increased 4 percent while demand for ``Campbell's Select'' and ``Campbell's Chunky'' boosted ready-to-serve soup sales by 17 percent.

In the U.S. baking and snacking unit, sales rose 5 percent on demand for 100-calorie packs of Goldfish crackers and whole- grain Pepperidge Farm breads.

International sales of soup and sauces expanded 6 percent, helped by changes in currency-exchange rates.

The company has developed products for the Russian and Chinese market that will be on store shelves within a year, executives said on a conference call today.

Conant, a 56-year-old former Nabisco Foods Co. president, took charge at Campbell in 2001 after three consecutive drops in quarterly profit. It took him until 2005 to boost shipments of condensed soup, which had fallen the previous six years. Campbell's controls 70 percent of the U.S. soup market.

In February, Campbell did a ``modest'' price increase on some products in its U.S. unit selling soups, Prego sauces and V8 juices, spokesman Anthony Sanzio said May 18.

A year earlier, the company increased prices in the same unit by 2.3 percent and in February 2005 it raised U.S. prices on most soups by 4.8 percent.

Organic Broth

Campbell generated higher prices with healthier products. It sells a 32-ounce box of organic Swanson broth for $3.49, 70 cents more than the same amount of 99 percent fat-free broth sold in the Harris Teeter supermarket chain in Greensboro, North Carolina. A 10 3/4-ounce can of reduced-salt tomato soup costs $1.19, 40 cents more than a can of regular tomato soup.

``Raising prices is a victory,'' said Ned Dewees, a principal at Douglas C. Lane & Associates in New York, which manages $2 billion including more than 600,000 Campbell shares. CEO Conant is ``spending money on new products, which is how you run a food business.''

The company introduced pop-top lids and better-organized supermarket shelves, while developing microwavable soups to compete for consumers buying deli meats, macaroni and cheese and other easily prepared foods from rivals such as Kraft Foods Inc.

Spending More

Campbell will spend more next fiscal year to expand into China and Russia, Pablo Zuanic, a J.P. Morgan Securities Inc. analyst in New York, wrote in a note May 16.

Consumers in China and Russia eat a combined 352 billion servings of soup a year, dwarfing the 20 billion servings in the U.S., according to Zuanic, who rates Campbell shares as ``neutral.''

In China, the company wants to sell soup to consumers who spend ``hours over the stove making the broth and preparing the vegetables,'' Conant said in a June 2006 interview. ``There is huge soup consumption and it hasn't been commercialized yet.''

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina at 1348 or cburritt@bloomberg.net.

Last Updated: May 21, 2007 16:04 EDT