CONSUMER products giant Unilever today said first quarter profits jumped 28% despite a significant increase in spending on advertising and promotions.
The Dove-to-Knorr group reported sales volume growth of 7.6% in the first three months of the year, offsetting a 3.3% drop in prices as a result of competitive pressures and lower commodity costs.
Emerging markets delivered the strongest growth, while in Europe sales volumes were up 4% on the back of strong sales in the UK and the Netherlands.
Margins were also higher in Europe despite greater investment in advertising and promotional activity as Unilever battled intense competition.
Chief executive Paul Polman said he expected trading conditions to toughen as the year progressed.
He added: "Commodity costs will increase in the second half, economies remain sluggish and competitive intensity will remain high."
Pre-tax profits were 1.39 billion euros (£1.2 billion) in the first quarter, an increase of 28% on a year earlier.
Shares rose by more than 3% following today's update.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said the company had taken another step towards restoring its reputation as a progressive consumer goods firm.
He added: "In cutting prices, Unilever continues to up the pressure on rivals. A move towards a more focused product offering has aided cost control, while lower food commodity costs have increased profit margins.
"On the downside, the economic outlook for Europe - a major market place - remains up in the air, while perceived recovery prospects have seen some bounce back in food commodity prices.
