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* Q3 gross margin up 310 basis points to 31.3 pct
* Adj. profit of $0.48/shr vs. est. $0.44
* Forecasts FY adj. profit at high end or above $1.65-$1.70/shr (Adds details from conference call, shares)
March 23 (Reuters) - Conagra Brands Inc's third-quarter profit beat analysts' estimates as the packaged-foods maker discontinued sales of lower-margin products and cut back on discounts.
The company, which makes Chef Boyardee pasta and Orville Redenbacher's popcorn, has been shifting focus to drive sales by adding more premium products to its brands while cutting back on discounting and increasing prices in some cases.
Conagra raised prices on products such as Banquet's frozen meals, which were previously sold at $1, and tweaked the brand's recipes, adding more chicken to pot pies and cream to mashed potatoes.
The company is also planning to make its Healthy Choice meals more upmarket by introducing premium products such as Power Bowls, which will include antibiotic-free meat and ancient grains, Conagra's Chief Growth Officer Darren Serrao said on a conference call on Thursday.
Such measures, along with the discontinuation of low-margin products, helped boost gross margins by 310 basis points to 31.3 percent in the third quarter ended Feb. 26.
Sales, however, fell 9.9 percent to $1.98 billion in the same period, but were in line with the average analyst estimate, according to Thomson Reuters I/B/E/S.
Conagra's sales have taken a hit in recent quarters as consumers increasingly prefer fresh food items over processed and packaged foods.
The Chicago-based company last year sold its loss-making private-label business to TreeHouse Foods Inc and spun off its Lamb Weston frozen potato business to become a branded-foods only company.
Net income attributable to Conagra fell to $179.7 million, or 41 cents per share, from $204.6 million, or 46 cents per share in the third quarter.
Excluding items, the company earned 48 cents per share from continuing operations, beating analysts' average estimate of 44 cents.
Conagra said it now expects adjusted earnings for the fiscal year ending May to be at or slightly above the high end of its $1.65-$1.70 per share forecast range.
However, the company said it expects sales to be at or slightly below the low end of its forecast of a decline of 4-5 percent.
Conagra's shares were up about 1 percent at $40.85 in morning trading. Up to Wednesday's close, they had risen 8.8 percent since the company completed its spin off of the Lamb Weston business in November.
Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Savio D'Souza and Martina D'Couto