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Herbalife Profit Tops Estimate; Lifts FY13 Outlook


Herbalife Ltd. (HLF), Tuesday reported a better-than-expected increase in fourth-quarter profit, as the nutrition company benefited from growth in volumes across all regions.

Moving forward, Herbalife raised its earnings and sales guidance for fiscal year 2013.

A network marketing company, Herbalife sells an array of weight management, nutritional supplement, energy, sports and fitness, and personal care products. Herbalife recently gained investor attention after activist investor Carl Icahn said he has built up a 12.98 percent in the company. Icahn said he plans to hold talks with the company to seek strategic alternatives including taking it private.

Icahn's increased stake in Herbalife comes just weeks after a spat with hedge fund manager Bill Ackman, who dubbed the company as a pyramid scheme and doubted its business model. Icahn in contrast said that Herbalife has a legitimate business model, with favorable long-term opportunities for growth.

For the fourth quarter, Cayman Islands-based Herbalife reported net sales of $1.06 billion, up 20 percent from $884.57 million last year. Analysts polled by Thomson Reuters estimated sales of $1.05 billion.

Among regions, strong growth was recorded in North America, Mexico, South and Central America, as well as Asia Pacific.

"Herbalife continues to deliver record results in sales and profitability as our independent distributors go deeper into existing markets, developing more and more customers using our nutrition products every day," said CEO Michael Johnson.

Worldwide volume during the quarter rose 18 percent from last year, on double-digit increases in each of its six regions.

The company reported quarterly net income of $117.9 million or $1.05 per share, compared to $105.4 million or $0.86 per share last year. Analysts on consensus estimated earnings of $1.03 per share.

For the first quarter, Herbalife expects earnings of $1.03 to $1.07 per share on net sales growth of 15 to 17 percent. Analysts currently estimate earnings of $1.06 per share on sales of $1.07 billion.

For fiscal year 2013, Herbalife now expects earnings of $4.45 to $4.65 per share on net sales growth of 12 to 14 percent. Earlier in October, it expected earnings of $4.40 to $4.55 per share on net sales growth of 10 to 12 percent.

Analysts currently estimate earnings of $4.64 per share on revenues of $4.53 billion for 2013.

Herbalife declared a quarterly dividend of $0.30 per share, payable on March 19 to shareholders as of record March 5.

Subsequent to December 31, 2012, the company has repurchased 4 million shares at an average cost of $40.61, and currently $787.6 million remains on the existing $1 billion share repurchase program.

Herbalife closed Tuesday at $39.74, up 2.58%, on a volume of 11.4 million shares on the NYSE. In after hours, the stock gained 0.05%. In the past year, the stock has traded in a range of $24.24 - $73.00.

by RTTNews Staff Writer

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