Unilever helped by prices ACand emerging markets

Consumer goods giant Unilever said price rises and emerging market growth helped offset the spiralling cost of commodities as it largely matched forecasts with a 4.3% rise in underlying first quarter sales.

The maker of Ben & Jerry's ice cream and Dove soaps cut prices last year to regain its competitive edge, but pushed them up in the first three months of 2011 in line with its biggest rivals and made the rises stick despite some sick economies.

Europe's food groups are grappling with soaring costs for inputs like coffee, milk, grain and crude oil and are attempting to offset the impact by passing the costs on to consumers through higher prices and by making internal cost savings.

The Anglo-Dutch group posted the first quarter underlying sales growth of 4.3% on Thursday compared to a company compiled consensus of 4.5% after growth at rivals Danone of 8.5% and Nestle at 6.4%.

Overall sales for the quarter rose 7% to 10.9 billion euros, while the Unilever agreed to pay a quarterly dividend up 8.2% at 0.2250 euros a shares.

Sales to emerging markets, which make up 53% of the group's business were up 9.9%, while across the world prices rose 1.8% and sales volumes increased 2.5%.

"Our priorities remain; profitable volume growth ahead of our markets, steady and sustainable underlying operating margin improvement and strong cash flow," said Chief Executive Paul Polman in a first-quarter results statement.

The Knorr soup and Lipton tea group has warned commodities such as edible oils, tea, milk and tomatoes are set to rise 1.8 billion euros to push its input costs up around 12% in 2011, but says price rises and cost cuts can protect margins.

Chief Executive Paul Polman has stuck to his goals to look for profitable volume growth and higher profit margins for 2011 despite rising costs and difficult trading in the mature markets of Western Europe and North America, and says Unilever should be able to grow its underlying sales by 4-6% a year.

Plans to raise prices in China by Unilever and rival Procter & Gamble  ran into trouble this month as China's state planning agency told them to delay price rises as authorities there looks to keep inflation under control.

Later on Thursday, some of Unilever's big rivals in the United States, Procter & Gamble, Colgate Palmolive and PepsiCo report on the first three months of 2011.