Swiss food giant Nestle said on Thursday that strong demand in emerging markets would help it offset rising raw materials prices.

It reported underlying sales growth accelerated to 6.4 percent in the fourth quarter and said it was on course to hit targets for 2011.

We are starting 2011 with continued momentum, well placed to face uncertainties ahead, including volatile raw material prices, Nestle said in a statement.

We are therefore confident of achieving the Nestle model in 2011: organic growth between 5 percent and 6 percent and an EBIT margin improvement in constant currencies.

Nestle can rely on its strong presence in emerging markets and the appeal of brands such as Nescafe coffee or KitKat chocolate bars to offset rising costs for milk, cocoa, coffee, sugar and grain.

Full-year net profit rose to 34.2 billion Swiss francs, including the proceeds from the sale of its remaining stake in eyecare group Alcon to Novartis .

Annual sales at its premium coffee capsules Nespresso brand exceeded 3 billion Swiss francs ($3.1 billion) for the first time, the maker of Gerber baby food and Maggi soups said.

A very strong set of figures with underlying earnings ... on the back of stronger-than-expected top-line growth driven by emerging markets and Asia. Its outlook statement is reassuring, Kepler Research analyst Jon Cox said.

Peers Danone and Unilever recently said they were confident about passing on higher costs but Kraft Foods lowered its 2011 forecast for earnings growth because it expects some consumers to be put off by price increases.

($1=.9669 Swiss Franc)

(Editing by David Hulmes)

Nestle