Shares of Herbalife Ltd. gained 5 percent on Wednesday after reporting better-than-expected second-quarter net income, helped by strong dietary supplement sales in China and Venezuela. The company raised its earnings forecast for the current year.

The Los Angeles-based weight loss and herbal supplement maker said late Tuesday that net income surged 40 percent to $67 million, or $1.01 a share. Excluding special items, earnings were $1.03 a share. Analysts surveyed by Reuters Estimates were expecting earnings of 92 cents a share before special items.

Revenue rose 21 percent to $640 million. Analysts were expecting $613 million.

Herbalife expects 2008 earnings of $3.64 to $3.69 a share, up from its prior outlook of $3.52 to $3.57 a share. Analysts were expecting earnings of $3.59 a share, before items.

The company produced cash flow from operations of $59 million during the quarter, and invested $25 million in capital expenditures, primarily technology to support distributor services. Herbalife, which recently was granted five more licenses to operate its direct-selling business in China, said net sales in China increased by more than 125 percent. Sales by its direct distributors in Venezuela rose 157 percent.

Shares of Herbalife were up $2.41, or 5.5 percent, to $45.82 in mid-morning trading on the New York Stock Exchange.

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