Colgate-Palmolive Co.'s (CL) second-quarter earnings rose 7.3% as new product launches in North America and growth in its Asian toothpaste business drove sales higher.

Still, the consumer company's stock dropped 4.9% to $79.68 premarket as sales missed analysts' expectations. Price competition has picked up in the consumer products sector, putting more pressure on manufacturers. Colgate's Hill's pet food business was also a weak spot in the quarter as volumes and sales dropped during the company's ongoing effort to change package sizes and prices.

Many consumer-product makers have raised spending on advertising and promotions and have rolled out new offerings to appeal to bargain-hunting consumers. In the U.S., Colgate said new product launches like Colgate Max White with Mini Bright Strips toothpastes are helping grow its oral care business.

The company, which has a large Latin American business, said the currency devaluation in Venezuela would hurt earnings more than previously thought. The company expects that devaluation to reduce 2010 earnings by 10 cents to 15 cents a share compared with its previous estimate of 6 cents to 10 cents a share.

Colgate reported a profit of $603 million, or $1.17 a share, up from $562 million, or $1.07 a share, a year earlier. Revenue increased 2% to $3.81 billion. Organic sales--which exclude currency fluctuations, acquisitions and divestitures--rose 3.5% as volume grew 3% and prices edged up 0.5%.

Analysts polled by Thomson Reuters most recently forecast earnings of $1.16 on revenue of $3.94 billion.

Gross margin was flat at 58.8% as cost-cutting benefits were offset by impact from Venezuela's currency devaluation.

North American sales, which account for 20% of the total, rose 4.5% as prices fell 1.5% and volume increased 5%.

Latin America sales, which comprise 28% of Colgate's total, organic sales were up 8% as volume grew 1% as volume increases in nearly every country, offset declines in Venezuela.

Its Hill's pet-food segment, which contributes 13% of sales, sales were down 7.5%, while volume and prices both declined by 4%.

   -By Tess Stynes and Anjali Cordeiro, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com;
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