Bubs Australia Limited (ASX: BUB) is based in Sydney, Australia and operates in the consumer staples industry. The company manufactures a range of premium infant nutrition products for the infants. Its core speciality is infant formula and organic baby food, cereals and toddler snacks, catering to the kids from new born phase till they reach preschool age.
On 30th April 2019, the company released its March 2019 quarterly update. Some of the highlights of the update are as follows:
The company clocked a gross revenue of $11.83 million, which is up by 103% from pcp. The month of March exclusively contributed, an outstanding number of $6.91 million in the revenue. The total YTD gross revenue stands at $32.87 million.
The gross sales across the product portfolio saw an increase compared to pcp. It included the gross sales of Bubs® goat milk infant formula, which increased by 302%, Bubs Organic® baby food gross sales, up by 22% and CapriLac® goat milk powder gross sales, up by 119% (all the comparisons mentioned before have been made with regards to the pcp).
The company has developed many partnerships in the March quarter until April, to target various aspects of the business, like expansion in channel capacity, to increase profitability etc. Some of the strategic developments are as following:
- The important investment was made by C2 Capital Partners with $31.44 million raised capital.
- Joint Venture MoU with Beingmate was signed for marketing and sales distribution of the Bubs® portfolio and to provide regulatory assistance in China.
- Sale of the non-core asset like Coach House Dairy® to sharpen business focus and reduce low margin impact.
Mrs Kristy Carr, CEO and founder of Bubs Australia stated that the continued increase in sales helped to attract investments from C2 Capital Partners. It also helped in the acquisition of China-approved canning facility, Australia Deloraine Dairy.
She further said that the cross-border eCommerce was progressing with the company’s overall direct sales to China, which had contributed in a rise of 884 percent, YoY basis. The swift progress of the company was also attributed to the initiation of the Corporate Daigou outbound distribution, and engagement with the Australian Chinese community through social media, influencers and so forth.
The company used a total of A$13.66 million for the operating activities, the highest expense being incurred on payments for product manufacturing and operating costs, which led to the cash outflow of A$11.53 million. Other major cash expenses were incurred on advertising and marketing (A$1.32 million), administration and corporate costs (A$1.2 million). Cash receipts from customers stood at A$9.03 million.
It used net cash of A$1.02 million for investing activities, including A$1 million of deposits for investments in Deloraine acquisition. Financing activities have led a total cash inflow of A$976,000, including A$643,000 which was received from the proceeds from loan repayments. At the end of the quarter, the company had net cash of A$13 million in the balance sheet.
The company also estimated the future cash outflow for the next quarter, which stood at A$15.65 million. It estimates the product manufacturing and operating costs to increase to A$12.01 million, from the current quarter product manufacturing and operating costs of A$11.53 million.
Notice of ceasing to be a substantial shareholder
The company also disseminated that Johannes Gommans, Penelope Gandar, Rupert Soar, Catherine Taylor (the substantial holders of the company) have ceased to be the same, effective 29th April 2019.
On 23rd April 2019, the company announced that it had completed the acquisition of Deloraine Dairy Pty Limited and inked an alliance with Chemist Warehouse.
The market capitalisation of the company is A$587.42 million. The 52-week high and low of the stock is A$1.320 and A$0.355 respectively. The stock closed the session at A$1.22, up by 3.896% from the previous close, as on 30th April 2019. In the last six months, the stock has delivered a return of 138.14%, and the YTD return stands at 153.85%.
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