* EBIT 231 mln euros vs forecast 188 mln
* Sales up 16 pct to 2.23 bln euros vs forecast 2.13 bln
* Says 2011 is expected to be a strong year
* Shares up 4.2 pct, hit all-time high
(Adds CFO comments, shares, analyst comment, details)
By Aaron Gray-Block
AMSTERDAM, April 27 Royal DSM NV (DSMN.AS), the world's biggest vitamins maker, beat earnings forecasts on Wednesday and was upbeat on its ability to protect margins from rising raw material costs, sending its shares to an all-time high.
The Dutch group posted a 27 percent jump in earnings before interest and tax (EBIT) from continuing operations to 231 million euros ($337.8 million), exceeding even the highest forecast of 196 million in a Reuters poll of analysts.
"We are more flexible today and can successfully pass on raw material (prices) increases," Chief Financial Officer Rolf-Dieter Schwalb told broadcaster CNBC.
He said DSM started raising prices in the third and fourth quarter of 2010 and accelerated this in the latest three months.
"We are not there yet. We still have potential to go on and we have to ... because there is no alternative. If raw material costs increase we have to increase our prices and I guess our customers also," he said.
DSM shares were up 4.2 percent at 45.275 euros in early trade against a 0.1 percent rise in the STOXX Europe 600 chemicals index .SX4P. The stock rose as high as 45.57 euros, surpassing a previous peak of 45.135 set in January.
Chemicals companies have faced accelerating raw materials prices and energy costs in recent months -- the result of recovering demand and political instability in oil-producing states -- which has tested their ability to raise selling prices to support margins.
But operating profit at DSM's polymer intermediates unit beat estimates thanks to 34 percent price rises and 9 percent volume growth for the unit, which makes caprolactum used in engineering plastics to supply the automotive sector.
ABN AMRO analyst Mark van der Geest said this unit's performance was the main surprise, highlighting "the unusually tight demand-supply balance and the high operating leverage in this division."
DSM Chief Executive Feike Sijbesma said in a statement: "Our business outlook for the rest of the year is positive and we expect 2011 to be a strong year."
Earnings at the nutrition unit, based in Switzerland, were hit by higher costs resulting from a stronger Swiss franc, but still beat estimates because of volume growth and the inclusion of Martek, the newly acquired U.S. baby foods ingredients maker.
Sales at DSM's pharma division disappointed, however, because of lower sales of flu vaccines -- which are traditionally unpredictable and seasonal. (Editing by Sara Webb and David Holmes) ($1=.6838 Euro)