Unilever sales top forecasts

By David Jones

LONDON (Reuters) - Unilever (ULVR.L), the maker of Dove soap, Sunsilk shampoo and Knorr soups, beat forecasts with a 7.2 percent rise in first-quarter underlying sales and said annual sales will top its target, sending its shares higher.

The world's third-largest consumer goods group, Unilever Plc/NV (UNc.AS) on Thursday also beat quarterly earnings forecasts, boosted by profits from disposals, as it raised prices to offset the rise in raw material costs.

"While it is early in the year, we now expect underlying sales growth in 2008 to exceed our 3 to 5 percent target range," said group Chief Executive Patrick Cescau in a statement.

In February, the Anglo-Dutch company had expected a sales increase at the upper end of its 3 to 5 percent target range.

Cescau said the group saw a good start to the year with strong growth across all categories and regions, and emerging markets being particularly strong, while it posted a higher-than-expected rise in operating margins of 0.3 percentage point.

Unilever shares jumped 4.3 percent to 17.33 pounds by 11:45 a.m., to be the FTSE 100 index's .FTSE fourth biggest riser, after a sluggish performance this year as they have underperformed London benchmark index by 10 percent.

"A fifth consecutive quarter of underlying sales growth in excess of 5 percent begins to look like a trend," said analyst Rob Mann at brokers Collins Stewart, added that improved innovation at the group has boost its overall performance.

Cescau has led Unilever's recovery from a shock 2004 profits warning, but has had to push up prices and cut costs to offset a sharp upswing in commodity costs such a vegetable oils, milk and packaging which rose 400 million euros in the quarter.