Campbell Soup Co reported a higher-than-expected quarterly profit on Monday, helped by price increases and easing costs for ingredients including grains and tomatoes that offset a drop in sales.

The world's largest soup maker also raised its sales and profit expectations for the fiscal year and its shares gained about 20 cents.

Sales fell 2.1 percent to $2.2 billion from a year ago, when Campbell's sales jumped 12 percent in the wake of a financial markets crisis. U.S. soup sales were down 3 percent.

The company, which also makes Pepperidge Farm cookies and Prego pasta sauce, has benefited in the last year as consumers prepared more meals at home. The company has also reined in costs, allowing it to increase its gross margin to 41.9 percent from 38.7 percent a year earlier.

Campbell's saw sharp declines in its ready-to-serve soups such as its Select Harvest line, although sales of its Chunky soups rose.

We built momentum in the latter part of the quarter when, as planned, we significantly stepped up our marketing and merchandising programs, Chief Executive Douglas Conant said in a statement.

For the year, Campbell now expects sales to rise 4 percent to 5 percent, versus a prior forecast of 3 percent to 4 percent. It forecast fiscal 2010 adjusted earnings per share would rise 9 percent to 11 percent, including an expected lift from currency translation. It previously forecast a 5 percent to 7 percent gain.

Campbell earned $304 million, or 87 cents a share, in the first quarter that ended November 1, up from $260 million, or 70 cents a share, a year earlier. Analysts, on average, had forecast 81 cents per share, according to Thomson Reuters I/B/E/S.

Sales fell 2.1 percent to $2.2 billion. U.S. soup sales were down 3 percent.

Campbell's shares were up about 20 cents, or 0.58 percent, at $34.32 in early New York Stock Exchange trading.

(Reporting by Phil Wahba, editing by Maureen Bavdek)