Colgate-Palmolive Co., the world’s largest toothpaste maker, said second half profit will fall because of higher marketing costs to fend off Procter & Gamble Co.

Colgate’s shares had their biggest decline in four years.

Earnings will be 57 cents to 59 cents a share in each of the next two quarters, the New York-based company said in a statement.

Colgate’s profit was expected to rise to 67 cents in the third quarter and 68 cents in the fourth, the average estimate of analysts surveyed by Thomson Financial.

The company’s chief executive, Reuben Mark, 65, is trying to maintain Colgate’s lead in American toothpaste sales after Procter & Gamble’s Crest briefly became the no. 1 seller in late 2003.

Colgate, whose sales in North America declined for four consecutive quarters, will increase marketing spending in the “high teens” percentage rate, Mr. Mark said on a conference call.

“They were invulnerable at one point, they’ve lost it,” said Jake Dollarhide, chief executive officer of in Tulsa, Okla.-based Longbow Asset Management Co., which manages less than $25 million, including Colgate shares. “Most people are worried about what Colgate is going to look like five years from now if things continue the way they’re going.”

Unilever, the maker of Lipton tea and Surf detergent, said third quarter earnings will fall as sales of top brands drop and profit margins shrink. Per-share profit for 2004 will rise less than 5% compared with a previous forecast for a gain of at least 10%, Finance Director Rudy Markham told reporters.

Shares of Col gate, whose products include Palmolive soap and Mennen deodorant, fell $6.10, or 11.23%, to $48.23 in New York Stock Exchange composite trading. They had climbed 8.6% this year.

Unilever shares fell $2.78, or 4.56%, to $58.16. Shares of Procter & Gamble fell $1.88, or 3.34%, to $54.38.

Colgate expects raw material and packaging costs to grow at about double their historical average, the company said. Prices for energy, chemicals, paper, and plastics used for packaging have increased this year.

After pushing teeth-whitening products last year, the company will focus more marketing on toothpaste.

“Maintaining our dominance in our key category is vital,” Mr. Mark said. “Country by country we worked out extra spending plans and put them into effect.”

The company forecasts global sales and volume to rise more than 7% in the third quarter, in line with analysts’ forecasts. Global operating profit is expected to increase slightly, reflecting higher earnings in North America and Europe and flat earnings in other international divisions and its Hill’s Pet Nutrition unit, the statement said.

Colgate is still recovering from last year’s failed effort to push Simply White tooth-whitening gel in North America, where Procter & Gamble, the maker of Crest toothpaste, took market share because of increased marketing for Crest Whitestrips.

Simply White lags Crest Whitestrips, whose share of the American at-home whitening market tops 70%.

The company’s price cuts on Simply White tooth-whitening gel, promotional packs of liquid hand-wash, and some toothpastes failed to boost North American sales, which fell 2.5% in the second quarter from a year earlier. Colgate gets less than a quarter of its annual revenue in North America.

Last year Colgate earned 63 cents in the third quarter and 65 cent in the fourth.

Mr. Mark, who has led Colgate since 1984, was the highest paid chief executive officer last year with about $141 million in total compensation, Business Week said in its April issue. He has focused on turning out new toothpastes and soaps and keeping costs low so savings could be used for advertising and product development.

The chief executive said in February he plans to stay at the company, which doesn’t have a mandatory requirement age, at least two more years.

Colgate in July promoted Ian Cook to chief operating officer and named Javier Teruel and Lois Juliber as vice chairmen, creating a three-way race to succeed Mr. Mark.

Mr. Mark, who sold Colgate’s detergent business in Ecuador, Peru, Columbia, and Europe, is focusing on Colgate’s larger and faster-growing toothpaste and deodorant units by adding products such as Max Fresh toothpaste with mini breath strips this quarter.