Herbalife Corp. offices building at 9800 S. La Cienega Blvd. The company said the Covid-19 virus could "materially impact" its results in 2020.

Herbalife Corp. offices building at 9800 S. La Cienega Blvd. The company said the Covid-19 virus could "materially impact" its results in 2020. Photo by Ringo Chiu.

Count downtown-based nutrition supplement company Herbalife Nutrition Ltd. as another company feeling the impact of the rapid spread of the Covid-19 coronavirus throughout China.

As part of its quarterly and full-year earnings announcement on Feb. 18, Herbalife stated that the Covid-19 virus has been impacting its operations but did not provide further details.

“The extent and duration of business disruption and related financial impact from the coronavirus cannot be reasonably estimated at this time but could materially impact our consolidated results for the first quarter and full year 2020,” Herbalife said in the earnings announcement. “The company will update its guidance for full year 2020 when we can reasonably estimate the impact.”

The company reported fourth-quarter earnings of $56.7 million, or 40 cents per diluted share, up from $48.9 million, or 34 cents per diluted share, for the same period in 2018.

The company reported 74 cents earnings per share using a formula that does not adhere to Generally Accepted Accounting Principles, which the website Seeking Alpha said was 10 cents above the consensus analyst estimate of 64 cents.

This non-GAAP earnings beat briefly sent shares up about 6% in after-hours trading on Feb. 18. But the stock settled back on Feb. 19, closing down 37 cents — or 1% — to $38.58.

Total revenue for 2019 was $4.88 billion, down 0.3% from 2018.

Herbalife’s sales in China were about $752 million for 2019, about 15% of total global sales, according to the earnings report. That China sales figure was up 25.7% from 2018.

The company opened its first manufacturing plant in China in 1998 and has since added a product innovation center in Shanghai; a botanical ingredients center in Changsha, the capital of central China’s Hunan province; and production technology centers in Nanjing, the capital of China’s eastern Jiangsu province, and Suzhou, west of Shanghai.

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Incoming Chief Executive of Herbalife John Agwunobi takes over on March 30.

In December, Herbalife opened a 9,200-square-foot training center for customers and distributors in Chengdu, the capital of Sichuan province in southwest China. At the time, the company said this was to be the first of four planned training centers scheduled to open by the end of 2020.

In Herbalife’s call with analysts following the earnings release, incoming Chief Executive John Agwunobi, who takes over the post on March 30, said the company has taken some steps in response to the Covid-19 threat.

“Our first priority is ensuring the safety of our employees and distributors, and we’ve taken prudent steps to do so, including limiting travel and postponing meetings where appropriate,” he said.

Outgoing Chief Executive Michael Johnson added that some employees at the company’s manufacturing plants in China did not show up after the plants reopened following the two-week Lunar New Year holiday. “But enough employees were in to keep production going,” he said.

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