CONSUMER goods firm Unilever says a fierce European price war has hit revenues.

The company, which operates the Flora, Marmite and Magnum ice cream brands, revealed a bite in prices slowed momentum in emerging markets.

Bosses said the impact meant sales volumes fell 0.4 per cent in the final three months of the year.

In an annual report, the firm also said turnover dropped 2.7 per cent to £37bn last year, although when currency movements are excluded the figure for sales growth was 2.9 per cent higher.

Operating profits were up six per cent to £6.1bn.

However, growth was mixed in emerging markets, with double-digit expansion in Indonesia, India, Turkey and the Philippines offset by a weakening performance in Africa, China and Thailand.

In Europe, prices were 1.8 per cent lower than a year earlier in 2014, with volumes also down 0.2 per cent.

A report said: "Our markets in Europe remained challenging with high competition in many countries and continued price deflation.

"This led to a decline in prices."

Paul Polman, chief executive, admitted it had been a difficult time for the industry, adding the company was not expecting a significant improvement in market conditions this year.

He said: "Despite a challenging year, we have delivered another year of competitive underlying sales growth and margin expansion.

"This consistency, now established over the last six years, has been achieved during a period of high volatility as we have built a more resilient company.

"However, we do not plan on a significant improvement in market conditions in 2015.

"Against this background, we expect our full year performance to be similar to 2014 with the first quarter being softer but growth improving during the year."

The company origins in the UK date back to 1885 when William and James Lever launched laundry soap Sunlight.

Its brands also include PG Tips tea, Hellmann's mayonnaise, Bovril and Comfort fabric conditioner.