Procter & Gamble Co

and Colgate-Palmolive Co posted better-than-expected quarterly earnings on Thursday as the companies hiked prices and cut costs to help offset weaker demand in the recession.

Both companies, which are rolling out new products to entice thrifty consumers back to stores, forecast sales growth for the year, excluding the impact of currency fluctuations, acquisitions and divestitures.

Shares of P&G were up 1.4 percent in premarket trading, while Colgate rose 1.6 percent.

P&G, known for products such as Gillette razors and Tide laundry detergent, posted a 4 percent drop in quarterly profit as consumers traded down to less-expensive items in the challenging economy.

The company has been highlighting products at a variety of prices to keep cost-conscious consumers interested in its brands. For example, shoppers looking for lower-priced laundry detergent can buy Era, which costs about 35 percent less than regular Tide. Those willing to pay for added features spend 60 percent more than they would pay for regular Tide to buy Tide Total Care, which reduces fading.

P&G said it expected earnings to be in line with Wall Street's expectations this year even though sales growth could be weaker than its previous forecast.

We believe P&G is well-equipped to weather the sluggish economic environment, with the impact of moderating commodity costs expected to lead to improving margins in coming quarters, while valuation remains compelling, Oppenheimer analyst Joseph Altobello said in a note to clients. He rates the shares outperform.

P&G earnings fell to $2.61 billion, or 84 cents per share, in the third quarter ended on March 31 from $2.71 billion, or 82 cents per share, a year earlier, when there were more shares outstanding.

Analysts polled by Reuters Estimates had expected a profit of 80 cents a share.

Sales fell 8 percent to $18.42 billion, below the $18.88 billion analysts had forecast. Volume declined 5 percent as retailers stocked fewer items, but organic sales rose 1 percent.

P&G said it was comfortable with the analysts' consensus earnings-per-share estimate of $4.22 a share for the year, with a range of $4.20 to $4.25.

It forecast organic sales -- which exclude the impact of acquisitions, divestitures and foreign exchange -- to grow 2 percent to 3 percent in the fiscal year ending in June. Earlier this year, P&G called for organic sales to rise 2 percent to 5 percent.

P&G expects net sales for the year to fall 2 percent to 4 percent, pressured by unfavorable foreign exchange.

Colgate, known for its namesake toothpaste, reported first-quarter profit of $507.9 million, or 97 cents per share, up from $466.5 million, or 86 cents per share, a year earlier. The results were a penny higher than analysts had expected.

Sales fell 5.5 percent to $3.50 billion, while analysts had forecast $3.57 billion. Unit volume fell 0.5 percent.

Both organic sales and global pricing increased 8 percent.

Colgate Chief Executive Ian Cook said the benefits of easing commodity and oil prices had begun to flow through, and coupled with higher pricing and expense-cutting, should offset the expected hit by the stronger U.S. dollar on raw and packaging material costs.

Gross profit margin should be up at least at the high end of Colgate's targeted range of 75 to 125 basis points for the year, he said, and he is comfortable with external profit expectations for both the second quarter and the year.

Analysts expect Colgate to earn $4.22 a share this year.

Shares of P&G rose to $51.15 in trading before the market opened after closing at $50.42 on Wednesday. Through Wednesday, the stock had fallen 18.4 percent this year.

Colgate stock, which had been down 12.9 percent year to date, climbed to $60.67 from $59.71 on Thursday morning.

(Reporting by Ben Klayman and Jessica Wohl; Editing by Lisa Von Ahn)