Bubs Australia shares dip following latest results

Bubs Australia shares have dropped almost 11 per cent following the goat milk infant formula company’s release of its second quarter results.

Bubs Australia has recorded sales of $14.54 million, up 21 per cent, in the second quarter of the 2020 financial year. NSW REAL ESTATE

SHARES in Australian goat milk infant formula company Bubs Australia have dipped despite an uplift in quarterly sales to an all-time high of $14.54 million.

Following the release of the company’s fourth quarter results today, shares dived almost 11 per cent, trading for 83 cents this afternoon, off the back of news quarterly gross revenue for the quarter was up 21 per cent compared to the same corresponding period last year.

But it may have been the Victorian-based company’s performance in China that has spooked investors, who have been informed sales there were down 32 per cent compared to the same time last year.

Bubs Australia executive chair Dennis Lin said cash flow for Chinese sales was affected by reduced CapriLac adult milk powder sales.

“(This) underlines our intention to relaunch productions and brands that will reflect the premium positioning of our superior products in this category and we expect to do so in the second half of this financial year,” he said.

A “refreshed” range of CapriLac products will be launched before June 30 this year.

Almost four in every five Bubs sales are made domestically, and this category witnessed a 31 per cent rise compared to the same time last year.

The standout performer across the board was Bubs’ infant formula, with sales up 77 per cent in a year, and making up 59 per cent of gross sales for the quarter.

Bubs founder and chief executive Kristy Carr said she was pleased to report positive sales momentum with a record second quarter sales.

“During the period we placed an increased focus on our international footprint beyond China … In December we also entered unto a distribution agreement with WeMe to distribute and market Bubs products in Hong Kong. We anticipate sales to the Pharmacy Channel in this market to exceed $1.2 million in the 2020 calendar year,” Mrs Carr said, adding Hong Kong would play a strategically important role in the near future.

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As of December 31 last year, the company had $39.1 million in cash reserves.

Earlier in December, Bubs successfully rose $35 million as part of a capital raising and retail share placement offer to allow it to take advantage of growth opportunities in China and emerging Asian markets.

The 14-year-old company claims to be the only infant formula maker in the world to use Australian goat milk. It sources its milk from the largest milking goat herd in the nation.