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Herbalife posts record financials, despite ‘unprecedented, untrue and unfair attacks’

By Stephen DANIELLS , 22-Feb-2013
Last updated the 22-Feb-2013 at 15:39 GMT

Herbalife Inc. – the third-biggest network marketing company – has recorded a record fourth quarter 2012 and record full year results.

The multi-level marketer reported net sales of $1.1 billion for its fourth quarter, an increase of 20% compared to the same time period in 2011. For the full year, Herbalife posted net sales of $4.1 billion, equivalent to an 18% increase on 2011 – another record.

In an earnings call with investors, Michael Johnson, Herbalife's chairman and CEO, said: “Our record 2012 financial results have carried into 2013 and we are experiencing strong momentum in the business despite what we believe to be unprecedented, untrue and unfair attacks on this company over the last 8 weeks.

“Our business continues to perform exceptionally well.”

Figures

More records were set for EBITDA for the full year with $736 million, said Johnson, with a record $178.8 million of EBITDA for the fourth quarter.

A record $477 million in net income was also recorded for the full year, accompanied by a record $117.8 million of net income, up 12 percent year-over-year.

"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 Johnson.

"Obesity and poor nutrition are global public health problems. Our distributors are proud to be part of the solution."

Fight back

The company has come under the intense scrutiny in recent months when allegations made by hedge fund manager William Ackman in December that caused the company’s stock price to tumble

Des Walsh, Herbalife’s president, said the company was addressing misconceptions about its business, and one area of focus is nomenclature.

“There is a misperception in the market that frankly, you know, people have sought to capitalize on because when a person hears the term, ‘distributor,’ then they naturally assume that that is somebody that is distributing Herbalife products,” he explained.

“What we, of course, know from our research is that a very significant percentage of people who become distributors do so in order to receive a wholesale price on Herbalife products because they are avid Herbalife users.

“So what we want to do is that we want to simplify matters by breaking out that group and identifying them separately so that they’re clear that this is a group that are not distributing product, but rather are engaged as wholesale customers.”

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