(AP Photo/Peter Dejong)

AMSTERDAM - Unilever PLC, the company behind brands like Lipton teas, Dove soaps and Ben & Jerry's ice cream, struggled in 2011 to pass on higher raw material costs to cash-strapped consumers as it reported that profits of 4.25 billion ($5.60 billion) were flat from the previous year.

The company said Thursday that despite its efforts to hike prices and cut costs, margins had also fallen fractionally. Revenues grew 5.0 per cent to 46.5 billion.

"In 2011 we have made significant progress in the transformation of Unilever to a sustainable growth company despite difficult markets and an unusual number of significant external challenges," said Chief Executive Paul Polman in a statement.

On the plus side, he pointed to the company's personal care products - brands such as Vaseline, Axe deodorants, Suave shampoo and the recently acquired TRESemme haircare product line - which had seen a like-for-like sales growth of 8.2 per cent. In addition, 2011 sales growth was more than 10 per cent in Africa and Asia, which now account for more of Unilever's sales than either the Americas or Western Europe.

But Polman warned that the company expected 2012 to be another difficult year where it would have to cope with difficult state of the economy and the increasing cost of raw materials - mainly due to high oil prices.

The results were in line with analysts' expectations, and shares fell 2.6 per cent to 25.205 in early trading in Amsterdam.

Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers who rates shares a hold, said that the company's volume growth had slowed to almost zero in the fourth quarter, and the economic outlook for Europe in particular is poor.

"On the upside, demand in the emerging markets is still strong and (Unilever's) concentration on higher margin personal care and household products does appear to be playing its part. Any fall in raw material costs would provide a clear positive," he said in a note on the earnings.

However, the company has cut costs significantly since Polman took the top job in 2009, competition in the U.S. and Europe is fierce and even developing markets are slowing. "A sense that the early wins have now been made is difficult to avoid," Bowman said.