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Unilever beats forecasts, share price jumps Add to ...

Consumer goods giant Unilever beat forecasts with a 4.8 per cent rise in first-quarter underlying sales and its new chief executive said it plans to boost sales with marketing and new products, pushing its shares higher.

Paul Polman, who took over in January having previously worked at rivals Nestle and Procter and Gamble, said on Thursday he aimed to drive volumes higher from the second quarter, the group having relied on recent price rises for its entire sales rise in the first three months of 2009.

"We are targeting profitable volume growth. We look to reignite volume growth while protecting operating margins and cash flow," Mr. Polman told a briefing after results on Thursday.

Unilever Plc shares jumped 9.1 per cent to £14.33 by 1200 GMT to be the FTSE 100's second-biggest riser on relief over the strong sales line after investors were braced for a worse performance and following their underperformance in 2009.

"Whilst areas of weakness remain, clear plans to turn them around are underway. In other words, the Unilever turnaround looks both sustainable and positive," said Deutsche Bank analyst Harold Thompson.

Mr. Polman said efforts to revive growth were underway with a cheaper detergent product launched in South Africa and smaller-sized deodorants sold in Vietnam for the same price.

He added that volume growth as well as margins and working capital would be targets for senior executive pay in the future rather than simply looking at earnings growth.

"Looking forward, life should become easier, volume comparatives ease, fix-it plans will gain traction, commodity headwinds should ease and change should continue to permeate through the organization," said Jeff Stent at broker Citi.

The quarterly sales rise from the maker of Sunsilk shampoo and Hellmann's mayonnaise was ahead of the average market forecast of 4.1 per cent and towards the top end of a 2.8 per cent to 5.8 per cent range for forecasts for the January-March quarter.

Anglo-Dutch Unilever Plc/NV, the world's third-biggest food and consumer goods group, said the sales rise came from price increases of 6.8 per cent with group quarterly sales volumes down by some 1.8 per cent.

But the strong sales line was tempered by a poor performance in Western Europe where sales dipped 2.8 per cent due to the slowdown and down-trading to private label goods leaving the group little room to raise prices with volumes off 3.7 per cent.

Mr. Polman shocked investors in February by scrapping its targets due to global economic uncertainty saying it could not give a 2009 outlook in current conditions, and he reiterated that message on Thursday saying he saw no reason to give guidance in the future.

The group, whose 400 brands include Ben & Jerry's ice cream and Omo detergent posted first-quarter earnings per share down 13 per cent at 0.30 euro a share, due to group disposals, compared with forecasts of around 0.32 euros.

Unilever shares have underperformed the FTSE 100 index by nearly 20 per cent and the DJ Stoxx Food and Beverage Index by over 15 per cent so far this year.

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