* Stock rises 4 percent as company shows productivity gains
* Clients' inventories decline on economic uncertainties (Adds comment from executive and analyst, details of earnings)
SAO PAULO, May 6 (Reuters) - Shares of Brazilian drugmaker Hypermarcas SA rose to a five-week high on Monday after better-than-expected earnings highlighted the company's ability to boost profits even as sales growth slowed.
Hypermarcas shares rose 4.2 percent to 16.57 reais in midday trading, their third-strongest session this year.
The company reported late on Friday that first-quarter profit more than doubled from a year earlier as cost cutting at factories offset cooling demand for its pharmaceuticals and consumer goods such as sweeteners and deodorant.
The results underscored economies of scale that Hypermarcas is finally beginning to reap after a spending spree in which the group racked up nearly two dozen acquisitions in four years. Companies in Brazil's consumer goods sector, which for years enjoyed robust sales growth, are now turning to cost controls to bolster profitability.
"With more gains likely ahead, momentum should continue," BTG Pactual Group analysts led by Fabio Monteiro wrote in a note to clients. Still, they said the stock's valuation now seems fair, given the highly competitive environment for Hypermarcas.
Net income rose over 150 percent from a year earlier to 102 million reais ($51 million) in the first quarter, handily beating an average estimate of 66 million reais in a Reuters poll.
Cost discipline at a pharmaceutical plant and the consolidation of assembly lines at a consumer goods plant helped boost the gross profit margin to 63.9 percent of revenue, from 62.2 percent a year earlier.
The greater profitability came as sales growth slowed to 6.8 percent, a third the pace of expansion in 2012, hurt especially by 4.5 percent year-on-year growth of pharmaceuticals revenue.
Rising inflation and eroding consumer confidence hung over operations in first quarter, Chief Executive Claudio Bergamo said on a Monday call with analysts, leading stores to restock products more slowly than consumers bought them.
"That difference was due mainly due to our clients' slightly more conservative posture, which we think is because of uncertainties about the macroeconomic outlook," Bergamo said.
He added that stores were unlikely to boost inventories until the economic outlook clears up near the end of the year.
That pressure is unlikely to affect results at Hypermarcas "too much," Bergamo said, reaffirming the company's target for this year's operating profit and debt levels.
$1 = 2.02 Brazilian reais Reporting by Brad Haynes and Alberto Alerigi Jr.; Editing by James Dalgleish