UPDATE 4-Nestle 9-mth sales rise despite higher input costs

(Adds news conference, further comment)

By Tom Armitage

VEVEY, Switzerland, Oct 18 (Reuters) - Switzerland's Nestle (NESN.VX) has passed on the rising cost of raw materials like coffee, milk and wheat to its consumers, boosting underlying sales by more than 7 percent after nine months.

The world's largest food group -- the maker of Nescafe coffee and KitKat chocolate bars -- met analysts' forecasts with nine-month underlying sales growth of 7.2 percent on Thursday, only a small slowdown from 7.4 percent in the first half.

Nestle warned that markets for agricultural commodities will remain tough into 2008 and said it expects to continue to raise prices to pass on the higher costs to its consumers.

"Our estimate is that after 10 years of growth and two years of steep growth, we consider that (commodity costs) in the coming years will stabilise, but at a high level," Chief Executive Peter Brabeck told a news conference.

Analysts said the results and input cost rises were in line with expectations. The shares were trading 0.2 percent higher at 518 Swiss francs at 1152 GMT.

"Stronger than expected pricing growth will ensure that margins are protected," said Helvea's James Amoroso.

Brabeck confirmed Nestle's 2007 outlook, with underlying sales, which strip out acquisitions and currency movements, set to grow by nearly 7 percent, above a long-term target of 5-6 percent. Nestle also sees a sustainable improvement in margins.

The firm said Chief Financial Officer Paul Polman will become head of its biggest region, the Americas, in February, after he lost the race to replace Brabeck as chief executive when the Austrian steps down in April next year.

Polman replaces Chief Executive designate Paul Bulcke. James Singh, currently head of acquisitions and business development, will take over from Polman as financial officer.

SOLID SHOWING

Analysts said the nine-month sale performance was solid and it was positive the well-respected Polman was staying.

"A strong set of figures with accelerating growth in Europe which is positive. The company has heavy exposure to health and wellness categories, the strongest growing part of the market," said Jon Cox, an analyst at Landsbanki Kepler.

Overall group nine-month sales rose 9 percent to 78.7 billion Swiss francs ($66.64 billion), underlying sales growth was 7.2 percent for the January-September period while internal growth, which also strips out inflation, was 4.5 percent.