Nestle echoed the cautious outlook for 2012 of other global food makers on Thursday as it said it was banking on new markets and products to put it ahead of the field after it posted forecast-beating 2011 sales growth.

The world's largest food group which makes brands such as Nescafe, Perrier, Maggi and Carnation warned that 2012 would be just as difficult as previous years due to continued economic uncertainties and volatility.

It was a challenging year, and we do not expect 2012 to be any easier, Chief Executive Paul Bulcke said in a statement.

Underlying sales growth for 2011 was 7.5 percent, beating an consensus forecast for 7.1 percent and rising from 7.3 percent in the first nine months, as it forecast underlying growth returning to its long term range of 5-6 percent.

Nestle also made its standard forecast for improved margin and underlying earnings per share in constant currencies for 2012 after reporting a 0.2 percentage point fall in its underlying operating margin in 2011 to 15.8 percent.

Overall we believe the market will react well to the strong sales results and positive outlook on 2012, despite the margin miss. However, we remain cautious on sales momentum entering 2012, Bernstein analyst Andrew Wood said in a note.

Nestle shares, which have lagged rivals to rise barely 1 percent this year, rose 1.5 percent to 55.25 francs by 1030 GMT, compared to a European food and drinks sector <.SX3P> up just 0.4 percent.

The group reported that absolute 2011 sales fell 4.8 percent -- slightly better than expected -- to 83.6 billion Swiss francs ($90.5 billion), as the rise in the safe-haven currency more than cancelled out underlying growth.

NEW PRODUCTS IN TOUGH MARKETS

It managed 3.7 percent underlying sales growth in the tough markets of Portugal, Italy, Greece and Spain and recorded a big surge in margins in Europe as it pushed new products like Dolce Gusto coffee and Maggi spice-filled roasting bags.

The key to our progress in Europe is innovations, Chief Financial Officer Jim Singh told an analyst conference call.

Analyst Polly Barclay at JP Morgan said, Nestle should trade at a premium to the sector given its relative resilience in Europe. Its shares currently trade in line with the sector.

Nestle is also growing fast in emerging markets, which Singh said should account for half of sales by 2020 from 41 percent last year.

French food rival Danone trimmed its sales growth and margin targets for 2012 on Wednesday, saying tough west European markets would offset strong growth in emerging markets, which now account for more than half of sales.

Anglo-Dutch consumer goods group Unilever sounded a similar tone, saying 2012 will be a difficult year as growth in emerging markets slows and demand in Europe and North America stays flat at best.

Singh declined to comment on Nestle's interest in buying Pfizer's

$10 billion Wyeth infant nutrition business to increase its emerging market exposure, especially China.

He said cash-rich Nestle saw no need for now to reinstate its share buyback program, cancelled back in August, which helped stoke talk the group was more interested in acquisitions.

We look at all possible transactions to see the fit. I am not going to tell you we do not look at larger deals, Singh told a news conference, but added the company's strategy remained focused on bolt-on acquisitions.

Nestle is seen as a front-runner for Wyeth alongside French rival Danone , according to banking sources, although both have been silent on the issue, declining even to acknowledge they are in the auction process.

Speculation also surrounds Nestle's 31 percent stake in L'Oreal after the French cosmetics maker said this week that heiress Liliane Bettencourt, 89, with a 30 percent stake in the 49 billion-euro company, was leaving the board to be replaced by her grandson Jean-Victor Meyers.

Nestle's Bulcke said the board change did not affect a shareholder pact due to expire in 2014, under which each side has a right of first refusal on the other's stake, while neither can raise its stake during Bettencourt's lifetime or for six months following her death.

Nestle raised its 2011 dividend 5.4 percent to 1.95 francs a share. ($1 = 0.9236 Swiss francs)

(Editing by David Cowell and David Jones)

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