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- Despite channel disruption arising from COVID-19, Bubs Australia (BUB) saw a 29 per cent increase in Australian infant formula sales in the September quarter
- The infant formula producer also experienced a 76 per cent increase in Goat Formula direct export sales to China from the prior corresponding period
- However, Bubs’ quarterly revenue was down 34 per cent from $14.21 million in Q1 FY20 to $9.4 million in Q1 FY21
- Further, in July, Bubs entered the vitamin and mineral supplements market after signing a deal with Chemist Warehouse
- A month later, the company and its joint venture partner Beingmate entered a memorandum of understanding to produce Bubs China label Goat Infant Formula in China
- During the quarter, Bubs burnt more than $10 million with the majority going towards product manufacturing and operating costs
- As of September 30, Bubs had just over $50 million in funding available, representing five quarters left of use if spending level stay the same
- Bubs is down 2.11 per cent on the market and shares are trading for 69.5 cents each
Despite channel disruption arising from COVID-19, Bubs Australia (BUB) saw a 29 per cent increase in Australian infant formula sales in the September quarter.
The infant formula producer also experienced a 76 per cent increase in Goat Formula direct export sales to China from the prior corresponding period (pcp).
China remains a strong market for Bubs with 27 per cent — $2.6 million — of the company’s revenue coming from China export sales.
However, Bubs’ quarterly revenue was down 34 per cent from $14.21 million in Q1 FY20 to $9.4 million in Q1 FY21, primarily as a result from the COVID-19 pandemic.
This decrease was primarily felt in the adult milk powder product sector.
“Despite macro volatility and channel disruption during the quarter, Bubs Infant Formula sales remains strong and continued to grow in all key markets,” Founder and CEO Kristy Carr said.
“Despite this growth in core business areas, our group performance was considerably impacted by the sharp downturn in the domestic daigou channel, particularly in relation to our adult goat milk powder products,” she added.
Quarter milestones
In July, Bubs entered the vitamin and mineral supplements market after signing a deal with Chemist Warehouse.
This agreement saw Bubs’ new Vita Bubs brand be distributed across 400 Chemist Warehouse stores from October.
Additionally, Jennifer Hawkins was appointed as the company’s new global brand ambassador for the next three years.
A month later, Bubs and its joint venture partner Beingmate entered a memorandum of understanding (MoU) to produce Bubs’ China label Goat Infant Formula in China.
This gives Bubs the opportunity to acquire an ownership interest in one of Beingmate’s infant formula manufacturing facilities in China.
“As planned, the Vita Bubs range of children’s vitamin and mineral supplement launched on-shelf in Chemist Warehouse stores nationally in October. We are now onto our subsequent production runs to fulfil anticipated export orders across China, Vietnam, Malaysia and Hong Kong,” Executive Chairman Dennis Lin commented.
“Meanwhile, we are confident our MoU with joint venture partner Beingmate to manufacture Bubs China label Goat Formula in China, will secure a faster, more certain route-to-market providing full access to China’s General Trade Channel,” he added.
Cash
During the quarter, Bubs burnt more than $10 million with the majority going towards product manufacturing and operating costs.
The company also spent more than $4 million on advertising and marketing, and more than $2 million on staff costs.
As of September 30, Bubs had just over $50 million in funding available, representing five quarters of funding remaining if spending level stay the same.
Of this, $42.6 million is cash and $8 million is unused financing facilities.
Bubs is down 2.11 per cent on the market and shares are trading for 69.5 cents each at 11:58 am AEDT.
