Nov. 5 (Bloomberg) -- Unilever, the world’s second-largest consumer products company, reported third-quarter profit and sales growth that beat analysts’ estimates after cutting prices in Europe to snare cash-strapped shoppers.

Revenue excluding acquisitions and currency swings rose 3.4 percent, more than the 3 percent median of 13 analyst estimates in a Bloomberg News survey. Net income fell to 1.05 billion euros ($1.56 billion), the company also said today, exceeding the average estimate of 997 million euros.

After taking the helm in January, Chief Executive Officer Paul Polman promised to stoke sales growth, which has lagged behind rivals including Procter & Gamble Co. and Nestle SA for years. By lowering prices, boosting spending on advertising and accelerating new-product introductions, Unilever boosted the quantity of goods sold by 3.6 percent in the third quarter, the second straight increase after two quarters of declines.

“Unilever’s volume momentum continues to be impressive,” Sanford C. Bernstein analyst Andrew Wood wrote in a note to investors today. “We are now finally seeing the commodities tailwind come through, as gross margins were up strongly and Unilever used the benefit to invest in advertising and promotion, which clearly benefited volume growth.”

Unilever slipped 18 cents, or 0.8 percent, to 20.63 euros at 9:14 a.m. in Amsterdam trading, outperforming the Dutch AEX Index, which declined 1.3 percent.

Volume Growth

The quantity of goods sold in western European countries including Germany, France and the U.K. rose 2.6 percent, even as prices fell 2.3 percent, the Rotterdam- and London-based company said today. Volume in the region was predicted to grow 1.8 percent, according to a median of 10 analyst estimates.

“Volume growth continues, yet 2010 may become tougher,” said Richard Withagen, an analyst at SNS Securities in Amsterdam. “I’m curious whether Unilever can drive volume growth further in 2010, as prices need to be increased again in combination with lackluster consumer demand.”

Price reductions this year will roll over into 2010, pushing down prices of Unilever products by 2 to 3 percent, Chief Financial Officer Jim Lawrence said on a conference call with journalists. The maker of Dove soap doesn’t expect prices to start rising until the middle of next year, he said.

Third-quarter net revenue declined 2 percent to 10.2 billion euros, Unilever said.

Net income fell 36 percent as last year’s profit included gains on the sale of Lawry’s seasoning and U.S. laundry brands.

To contact the reporter on this story: Jeroen Molenaar in Amsterdam jmolenaar1@bloomberg.net

Last Updated: November 5, 2009 03:23 EST