Eagle Health grounded by coronavirus

ASX-listed China supplements business Eagle Health has directly blamed the coronavirus for disruptions that will hurt sales.

A traditional Chinese medicine store in Beijing. Picture: AFP

Eagle Health, a health and nutritional products business which manufactures and distributes a range of health supplements in China, has become the first publicly-listed Australian company to directly blame the coronavirus outbreak for major disruptions that will hurt sales.

The ASX-listed Eagle Health said its Xiamen production faculty had been initially shut down for 10 days for the annual spring festival at the end of January, but the coronavirus outbreak meant workers would then face a government-imposed quarantine period of 14 days.

Because of this normal production would not resume until March 1, Eagle Health said.

Eagle Health has more than 300 Zhang Lao San franchised stores, which have also been disrupted.

Eagle Health’s manufacturing facility and head hffice in Xiamen, China, acts as a hub for distribution to pharmacies, health food stores, trading companies and supermarkets.

“The current in-country infection control protocols have allowed for very limited public movement in all areas of the country, which has caused a wide spread impact to the country’s economy as well as specific business segments, including and not limited to logistic outages between manufacturers and distributors, and to the retail outlets and shopping malls,” the company said.

Because of store closures, the company anticipates a temporary adverse effect on sales.

“The board of directors has commenced plans to mitigate and reduce the further potential impact on sales, including and not limited to strengthening its alternate sales channels and focusing on both existing and new products which are deemed to have higher consumer demand and priority in conventional and functional health, driven by the current environment,” Eagle Health said.

It is the first company to directly blame poorer sales on the virus.

Other businesses are facing supply chain problems as Chinese factories remain closed and their workers stuck at home.

Last week furniture retailer Nick Scali warned the disruptions caused by the coronavirus would delay shipments from China by up to two weeks.

On Monday vitamins company Blackmores placed its shares in a trading halt on expectations it would unveil a profit warning as its sizeable business in China is dented by the coronavirus.

Eagle Health hopes its range of eastern and western medicinal products will be sought by consumers looking to improve their immunity levels in the face of the coronavirus outbreak.

“Local authorities have suggested that people with low immunity may be more susceptible to infection with the new coronavirus,” it said.

“The company’s current range of products holds many formulations and ingredients which are known to be supportive for immunity, including its American ginseng series products, vitamin series products, Dendrobium series products, and amino acid oral solutions - all of which are approved by the National Authority as supportive health products for their respective representations.”