Herbalife Ltd., the nutrition company at the center of a battle between hedge-fund managers Bill Ackman and Carl Icahn, posted fourth-quarter profit that topped analysts’ estimates and raised its earnings forecast for this year as sales rose in Asia.
Net income increased 12 percent to $117.9 million, or $1.05 a share, from $105.4 million, or 86 cents, a year earlier, the Cayman Islands-based company said yesterday in a statement. Analysts projected profit of $1.03 a share, the average of seven estimates compiled by Bloomberg.
Herbalife is fighting accusations from Ackman, founder of New York hedge fund Pershing Square Capital Management LP, that it uses inflated pricing, misleading sales information and a complicated incentive structure to hide a pyramid scheme. The company has repeatedly denied the allegations, saying it is retail-oriented and sells products with unique ingredients. Icahn, chairman of Icahn Enterprises LP, has come to Herbalife’s defense.
“There’s not any bad news in those numbers,” Alan Knuckman, chief market strategist for Chicago-based Optionshop, said in a Bloomberg television interview yesterday.
Herbalife fell 2.7 percent to $38.66 at 1:22 p.m. in New York after earlier gaining as much as 2.8 percent. The shares climbed 21 percent this year through the close of regular trading yesterday.
Fourth-quarter sales rose 20 percent to $1.06 billion, topping analysts’ $1.05 billion average estimate. Revenue from the company’s Asia Pacific region rose 19 percent to $295.2 million. North American sales increased 19 percent to $197.1 million while China saw a 14 percent jump to $67.1 million.
Profit this year will rise to as much as $4.65 a share, up from a previous forecast for a maximum of $4.55. Analysts estimated $4.63, on average.
Herbalife said yesterday in a filing that, after “market events” in December and a meeting the company requested with regulators, investigators with the U.S. Securities and Exchange Commission requested information on Herbalife’s business and financial operations. The company said it was responding to those inquiries.
Ackman said in December that Pershing Square had sold short more than 20 million Herbalife shares, which was about 97 percent of the 20.7 million short interest at the time. Herbalife has said Ackman’s short position has driven what the company says are baseless accusations.
Ackman listened in on Herbalife’s conference call today and didn’t attempt to ask a question, he said in an interview.
“The questions that would create transparency are not questions asked by bullish analysts,” Ackman said of what he heard. “The questions an investor should want answers to concern the legality of the business model. We asked those questions in a public filing two weeks ago and they have gone unanswered despite the company’s previous public commitment to answer any and all questions in the interest of transparency.”
Herbalife spokeswoman Barb Henderson didn’t immediately respond to a request for a comment.
Icahn last week disclosed a 13 percent stake in Herbalife and said he would seek talks with the nutrition company. Strategic alternatives for Herbalife may include taking it private, the 77-year-old billionaire said in a filing with the U.S. Securities and Exchange Commission.