Consumer products giant Colgate-Palmolive Co. (CL) on Monday warned that second-half earnings would fall well short of Wall Street forecasts due to increased costs, and shares plunged in heavy trading.

The maker of Colgate toothpaste, Irish Spring (search) soap and Simply White (search) tooth-whitening products forecast earnings per share of 57 cents to 59 cents in both the third and fourth quarters.

Analysts' average forecasts are 67 cents per share for the third quarter and 68 cents per share for the fourth quarter, according to Reuters Estimates.

Shareholders were clearly disappointed. Shares of Colgate were at $48.34 Monday, down $5.99, or 11 percent, on heavy volume on the New York Stock Exchange (search). The day's weakest level of $48.09, at that point, was a 52-week low surpassing the prior low of $48.56 set Dec. 19. The shares hit a 52-week high of $59.04 on June 22.

"This is not a happy thing to do," Reuben Mark, Colgate chairman and chief executive, told analysts during a conference call Monday. However, he said he hoped shareholders would understand that it was necessary to react to increased competition in parts of the world.

"We are fighting the appropriate battles and ... we are winning," Mark said.

However, Colgate was unable to offset the higher levels of marketing spending with internal cost savings because it was fighting significant headwinds from increases in raw material and packaging costs, he said.

"That means a short-term disappointment, but it is my impression that the business is extremely solid," Mark said.

Colgate expects worldwide volume for the third quarter will rise more than 7 percent, with dollar sales up about the same. Operating profit in North America and Europe is also expected to be higher, according to Mark.

Operating profit in its other international divisions and at its Hill's pet food operation is expected to be level with the prior year, resulting in a slight increase in worldwide operating profit, the company said.

Reuters and the Associated Press contributed to this report.